Are VoIP Apps a Threat to Mobile Service Providers?

Over-the-top (OTT) VoIP services such as WhatsApp and Viber have become popular during the last few years. This popularity of OTT apps is fueled in part by the availability of low-cost smartphones and the emergence of cheap data plans.

While users are happy with these new instant messaging services, telecom service providers are feeling the pinch. It is estimated that in India alone, telecom providers will lose roughly $3.1 million in text messaging revenue by 2016 as more people are likely to send text messages through these OTT apps instead of using the SMS service of the telecom provider. Also, voicecall apps like Skypeare eating into the telecom providers’ voice service revenues. With more than 280 million active users, Skype alone can cost these companies $36.5billion in revenue every year.

To counter this intense competition from OTT apps, leading service providers in India such as Bharti Airtel are calling for greater regulation. In response, the Telecom Regulation Authority of India (TRAI) is going to come out with a discussion paper that details the impact of OTT apps.

The paper is expected to encompass more than just the loss of revenue for the telecom providers. The paper will address other issues such as security and bandwidth too, in order to get a comprehensive state of OTT and its impact on the society.

Besides Indian telecom providers, other service companies around the world are also apprehensive about the growth of these mobile apps. For example, the CEO of Telenor, a Norwegian telecom company, thinks the newly-announced voice services of Whatsapp could be a potential threat for telecom operators. Also, the leading service providers in Jamaica, Digicel and LIME, are working on a strategy to counter the threat from OTT apps. However, the co-founder of Whatsapp, believes the app will improve the business of service providers because more people will opt for data plans.

To decide the winner of this battle, the next few years are likely to be crucial for telecom providers, regulatory authorities and mobile app developers as they chart a niche for themselves.

Clicky