Mark Zuckerberg, CEO of Facebook delivered at Mobile World Congress said that WhatsApp was worth more than the $19bn Facebook paid for. He gave limited insights on how he intends to monetize WhatsApp but ruled out monetizing customer data. WhatsApp is scheduled to launch voice service on top of its existing messaging service in Q2-2014. The main risk for operators is the potential cannibalization of voice usage and revenues by data as is already the case for SMS. With 95% of Indian users in Pre-Paid segment, there are no bundled offerings by Telcos which can cannibalize there revenues.
In this backdrop, we all know that Indian Telecom industry operates in a Oligarchy and Cartels. First, Mukesh Ambani controlled new entrant Reliance Jio Infocomm will leave no stone unturned to reduce the Interconnect charges which will be a severe deterrent to incumbents – Airtel, Vodafone and Idea. Adding to the incumbents woes will be the VoIP traffic within India generated from OTT Apps such as WhatsApp, Viber, Wechat, Line, Skype etc which will severely effect Telecos’ Revenue Per Minute in the Long Term [As we just have 3G coverage about 15% and negligible 4G compared to 2G]
Taking cues from the American Telecom Industry where Verizon won against FCC where Verizon (which, as an operator, constructed the network!) appealed through the court system, proposing that the FCC did not have the authority to impose these rules under broadband’s classification as an information service. Shortly after this, last month, Netflix [Content Owner] and Comcast [ISP] came to an agreement whereby Netflix would pay Comcast more in order to ensure faster delivery of content to its customers. This we term as preferential carrying of traffic.
The other side of prioritization (i.e., providing faster speeds to those who pay) is of course blocking . While there has been no test case of this, it is of course legally and logically acceptable for operators to slow down or block traffic generated by customers who are hogging network resources and not paying an adequate amount for it [The Fair Usage Policy Comes into Picture here].
With Airtel’s Mittal already saying that OTT Apps Service do not pay any Spectrum & Regulatory Fees and is in favor of some Interconnect Fees as expressed in the MWC 2014. Operators having paid Billions in Spectrum Fees and Network CAPEX for providing 3G /4G LTE and also a CSFB network for seamless experience will work hard together to block Free OTT Apps cannibalizing their 2G Voice Revenues.
Reliance Jio will definitely fight for lower interconnect regime in the immediate offing but may also be interested in FREE Flow of OTT Apps Traffic as they can directly launch VoIP Services instead of the usual PSTN network. However, this scenario is still far (at least 3 years) by then the Telcos will start adjusting to the changing needs of customers.