Internet of Things
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It’s taken WhatsApp more than a year to deliver on CEO Jan Koum’s MWC 2014 announcement that the Facebook-owned company would add VoIP to its messaging app, an update that was initially slated for launch in 2Q14. After a multicountry beta trial and an invite-only version of the capability, the company has enabled VoIP on its Android app for all users, as an update. WhatsApp cofounder Brian Acton told Facebook’s F8 developer conference in late March that VoIP would roll out to iOS in a matter of weeks. With 700 million monthly active users (MAUs) of WhatsApp globally, the inclusion of VoIP has the potential to significantly affect mobile operators’ voice revenues.
Mobile operator fears regarding VoIP-led cannibalization of voice revenue might be about to be realized, as WhatsApp begins the long-delayed process of officially adding a calling feature to its eponymous messaging app. WhatsApp is reported to have spent most of the past year fine-tuning and testing its new Calls capability, the trial of which Ovum understands had 20 million users as of end-2014 (equating to about 3% of WhatsApp MAUs).
Given that the popularity of WhatsApp for messaging has caused a decline in SMS traffic and revenues for a number of operators, it would be fair to assume a similar outcome for operator voice services – especially given that WhatsApp’s user base is well on track to reach 1.1 billion users in 2015, according to Ovum’s OTT Communications Tracker.
But WhatsApp won’t have it all its own way, especially given the long lead time for WhatsApp Calls. Even before WhatsApp announced it would add VoIP, competitors in both the telco and OTT markets had introduced VoIP services – and more companies did so in 2014 – which means that WhatsApp is entering an already crowded market. Operators have also had more time to prepare their responses, including evolving their communications services and/or using bundling strategies. It is also possible that operators in some markets will lobby regulators for the right to block WhatsApp Calls.
A key differentiator for WhatsApp has been its continued focus on providing easy-to-use, high-quality communications services. The focus on ease of use seems to have been retained with WhatsApp Calls, with the company enabling one-tap calling of contacts via the app’s new Calls tab. However, the quality of VoIP is very much dependent on the best-effort nature of the IP network, which is an industry-wide challenge, but which is also something that seems to be well understood by users. That means it’s likely that users will be more forgiving of WhatsApp Calls if there are dropouts or lags, since it’s what they’ve come to expect with other VoIP services. Of course, WhatsApp will gain plaudits if it is able to provide a superior VoIP experience even where network coverage is patchy.
The new Calls capability opens up the opportunity for Facebook to start generating revenues from WhatsApp, for example, by being able to offer add-on packages of minutes and/or messages in order to reach non-WhatsApp contacts. WhatsApp could also, conceivably, take a lead from Italian low-cost roaming provider Zeromobile and start offering own-brand SIMs, or even establish itself as an MVNO. In addition, WhatsApp is in a good position to add complementary features, such as video calling, which would strengthen its communications proposition. However, Ovum believes that WhatsApp needs to move more quickly in order to realize these opportunities and to remain competitive in a market where the emphasis is turning toward the use of communications services as a platform for providing content and commerce.
OTT Communications Tracker, TE0003-000845 (March 2015)
“Facebook’s Messenger Platform takes measured steps towards a richer user experience,” TE0003-000848 (March 2015)
“As Facebook closes its acquisition of WhatsApp, expect to see VoIP and more MVNO-type deals,” TE0003-000803 (October 2014)
Pamela Clark-Dickson, Principal Analyst, Consumer Services
Consumer & Entertainment Services
By Adam Thomas 28 Mar 2018
With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.
By Evan Kirchheimer 26 Apr 2018
Service provider interest in justifying 5G investment through its potential to open new revenue streams from the enterprise segment is growing ever greater.
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