Early last week Facebook’s acquisition of Whatsapp for at least $16 billion made several dozens of people millionaires and billionaires, but they aren’t the only ones. More parents and teens will continue to save thousands using the app and avoiding texting fees.
Before these messaging apps, you had to purchase your texts through your carrier. The way texts are sent with SMS uses the same infrastructure that mobile carriers use to handle voice calls. These texts occupy a minuscule amount of bandwidth on carriers’ airwaves, making them essentially free to provide. Because of this, there was a huge profit for carriers like Verizon who charged 20 cents a text to customers who didn’t sign up for a messaging plan.
When Whatsapp first started it was not a messaging app, but more like a Twitter. Then its founders noticed people were utilizing it to send communication back-and-forth to avoid fees. Although Whatsapp wasn’t technically free to users, it was very close to free. You had to have a smartphone and a mobile data plan with Internet to route the messages.
Whatsapp stood out among it’s competitors with it’s ability to quickly send messages across the globe and held strong to its lack of fees. The founders also worked to have the app functional across iPhone, Android, BlackBerry, Symbian and Windows Phone, giving it a leg up on BlackBerry’s BBM or Apple’s iMessage which only work between similar devices.
It is unclear what is to become of the app although it has pledged to remain ad-free after the acquisition. It will be interesting to see if voice calls and expensive services like cable head in the same ‘free’ direction in years to come.