Raise your hand if you are using a smartphone.
If you did, raise your hand again if you are using Whatsapp.
If you are using Viber, raise your hand one last time.
If your hand is up, you are a big threat for your telecom operator. As the more the smartphone penetration increases, a bigger portion of the telco voice and messaging revenue shifts towards VOIP (voice over IP) and MOIP (messaging over IP). Today, the telco companies are trying to offset this erosion by data ARPU (average revenue per user) uplift and churn reduction; yet, the long-term effects OTT (over the top) cannot be diminished just by these steps. Apps like Whatsapp and Viber are highly utilized in the means of network usage. For example, I’m a heavy Whatsapp user, having sent 120K messages (at least %10 with an image), yet the total data I have used is only 145MB.
I believe that the telco operators need to address VOIP and MOIP seperately.
The main reasons why people with a smartphone use instant messaging apps is because they provide a better user experience in comparison to SMS.
– They’re a lot faster.
– The feeling of messaging “real-time” appeals to us. Seeing that someone is “online” or “typing” has become a need.
– Sending images and audio records is very easy with IM.
– We feel that using IM is for free, although it is not.
– Creating groups, sending group messages and broadcasting differentiate IM from SMS.
Considering all the benefits of MOIP, there a couple of ways a telco can compete with OTTs.
– Develop its own IM app: It has to offer a unique feature or a user experience to replace the existing players in the market.
– Build partnership with an OTT: Although there is a risk that the core services could be marginalized by OTT players, these services can be very popular among customers and attract new customers.
– Neutralize the OTT effect: A significant reason why customers use OTT is to save money. Introducing very large messaging bundles with reasonable prices will both reduce the OTT usage and gurantee revenue.
In the case of mobile VOIP, millions have downloaded free voice apps such as Skype, Tango, and Viber, and are willing to reduce costs. Yet, even with the dramatic improvement of network quality, the user experience through VOIP is definitely worse than regular voice experience unlike in the MOIP case. Therefore, people mostly prefer these apps for international calls and international roaming. At some point, there will definitely be an app that will offer a mobile VOIP experience just as good. Until then, the telco companies can try to fight OTT services unless they are willing to acquire or make a partnership with one:
– Blocking VOIP services for low-end or pre-paid customers
– Reducing network quality
– Introducing bundles with VOIP services
It is predicted that 2014 will be the year of big changes for the telco industry. The current acquisition of Whatsapp by Facebook is the first sign of change. I believe that Internet.org, the partnership between Facebook and six mobile phone companies that aims to bring affordable Internet access to everybody by increasing affordability and efficiency, will also have side effects to the telco industry. Let’s wait and see how the telco companies react to these new developments and the new advances in the OTT services.