Why Pay for Texting When WhatsApp Is Free?

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Feb. 21 (Bloomberg) -- Bloomberg News’ Scott Moritz and Contributing Editor Nicholas Thompson examine how WhatsApp is beating wireless carriers at their own game in texting on Bloomberg Television’s “In The Loop.”

Contributing editor nick thompson.

You need to pay for texting, so this is not good for the wireless companies.

Great for us, not good for them.

Never good when you are charging a lot as a carrier for these kinds of services.

The u.s. carriers saw this coming.

They had big revenues from texting and decided that the threat of whatsapp and various other ones that they would bundle it . $3.2 billion it is expected to cost the wireless companies.

2016, 50 $4 billion.

In other words, this is snowballing for them.

One, is not the acquisition that hurts them, it is the creation of whatsapp.

Second, it is not like money is being taken away from wireless company's. wireless companies had a service where a cost of them basically nothing and what it is that they charged us a lot for it, and somebody came along that was innovative and said, you know what, we will give it a people for basically nothing, which is what it costs on the infrastructure level, they will start special stop getting the monopoly or duopoly -- they will stop getting the monopoly or duopoly.

It took a long time, and a small company came and ate their lunch.

Too bad.

What do they do now?

Can they ever get any of the business back?

Do they follow a whatsapp model and make it either free or, what, 99 since the year, for people so that -- 99 cents a year, for people so that they have another way of getting revenue?

It was a small opportunity at the time.

They deliver a lot of wireless service but it does not -- they did not see this small thing as being worthwhile.

Now they probably regret that.

Well, they are responding.

They are moving to things where the price they charge is equal to the marginal cost to them.

It is where they would have been had they not had this monopoly situation where they captured all the regulators.

They are moving to a more rational world.

But everyone is on facebook messenger, whatsapp -- but we are also on verizon and at&t and we have this stuff built into our phones.

They are slow, they don't innovate very well, there probably going to lose a lot of their -- they are probably going to lose a lot of their messaging business, but they have plenty of other -- what do you think of this deal?

$19 billion, was it smart to pay this amount of money?

No, it is an insane deal for facebook.

They have a stand against advertising analyst everything were facebook makes money.

Whatsapp is very defiantly anti-advertising.

Facebook used to be that way, too, until they went public -- it will have to change the philosophy of whatsapp, which means it is a very high risk move.

You are spending $19 billion for a company with $20 million in revenue and you have to massively change the culture and get the employees to be excited about working for you.

Not an easy task.

Well, they do have compensation.

55 employees.

$19 billion, that might motivate you.

It is a hard thing to do, and you wonder, what is the next whatsapp?

Do they run the risk that this becomes sort of obsolete over the next couple years and they have to pay $25 billion or $30 billion for the next one down the road?

Well, the interesting thing is that there are relatively low barriers to entry.

You can start a service with little code but there are network effects could do more users to go in, the more valuable your service is.

It is not easy for a company to use a brass whatsapp at this point.

Facebook -- to surpass whatsapp at this point.

Facebook has bought something valuable.

It is just $19 billion that make me wonder.

Lot of money.

Thank you so much.

Great to see you, nick.

Good to have you here, scott.

The u.s. postal service is going high-tech.

The late apple cofounder steve jobs will be featured on postage stamp.

Other approved the subjects include basketball great wilt chamberlain, tv host jimmy carson, and music rates j -- music greats jimi hendrix and janis joplin.

Good luck.

Ukraine's leader has signed an agreement with the opposition to end three months of deadly violence.

We will have more and what the deal will mean for the country, next.

This text has been automatically generated. It may not be 100% accurate.

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