WhatsApp Shows How Phone Carriers Lost Out On $33 Billion

Facebook Inc. (FB)’s $19 billion purchase of mobile-messaging startup WhatsApp Inc. is a stark reminder of how much money phone carriers are losing out on as competitors let users text and chat at no charge.

Free social-messaging applications like WhatsApp cost phone providers around the world -- from Vodafone Group Plc (VOD) to America Movil SAB (AMXL) and Verizon Communications Corp. -- $32.5 billion in texting fees in 2013, according to research from Ovum Ltd. That figure is projected to reach $54 billion by 2016.

As more customers have switched to smartphones with better Internet access, people are relying more on applications such as WhatsApp to communicate. Instant-messaging services have taken off outside the U.S. where carriers don’t throw unlimited texting into voice and data plans. The rise of these applications has offered a cheaper source of communication, especially for correspondence between different countries, undercutting the texts that had once been a key source of income for carriers worldwide.