WhatsApp adding voice services potentially cuts out carriers
By Chantal Tode
February 25, 2014
WhatsApp is adding voice services
While WhatsApp’s move to add voice services could further deteriorate wireless carriers’ revenues, the popular messaging app and its soon-to-be owner Facebook are positioning themselves as partners to carriers.
WhatsApp said this week at Mobile World Congress that it will add a voice call service by the second quarter. The news is the latest example of how Facebook – which is acquiring WhatsApp for $19 billion - wants to extend its influence beyond its core social connection positioning, with founder and CEO Mark Zuckerberg urging wireless carriers to offer access to basic Internet services such as Facebook Messenger and WhatsApp for free during a speech he made at Mobile World Congress this week.
“[The news] has potential to be massively significant, but it isn't off the bat,” said Michael Burke, co-founder and president of appssavvy, New York. “If WhatsApp can provide someone with all of the voice and text they need, then why not buy an iPod touch and use it like a phone.
“The carrier is out of the equation here, unless they are providing the Wi-Fi/cellular data to the device,” he said. “Not much different than people using Apple TV or Roku versus cable.
“Just like there is ‘cutting the cord’ for cable, there could be ‘cutting the cellular’ for mobile. This will happen over time, and the carriers will be fighting to compete on both ends the services and the connection – Wi-Fi and cellular.”
Over the top
During his keynote speech at Mobile World Congress, Mr. Zuckerberg said that the biggest barrier in connecting people to the Internet in emerging markets is expensive data plans and not the cost of a phone. He also pointed to a bundled program offered by Globe Telecom in the Philippines as an example of what wireless carriers could do about the problem, with basic Internet services such as Facebook and WhatsApp offered free as part of a bundle.
Per Eden Zoller, a principal analyst at Ovum, Facebook wants other operators to adopt a model similar to Globe Telecom’s, which offers all the major global over-the-top messaging services for free as part of its core call-and-text bundle. The social network is also reportedly looking to work with three to five operator partners over the next year on this.
However, it is not clear how carriers would make money under such a program and what their interest level would be.
If carriers were to heed Facebook’s suggestion, this could have indirect benefits for carriers such as increased mobile Internet usage and subscriber gains.
WhatsApp and other messaging apps have been a drag on wireless carriers' revenues as the number of subscribers who use such over-the-top services continues to grow thanks to the fact that they are free or significantly lower in cost.
WhatsApp currently has approximately 450 million customers and is looking to reach 1 billion users, something expanding the appeal of the app into voice services could help it achieve. The move could also further deteriorate carriers’ revenues.
Facebook and WhatsApp have tried to position themselves as partners to carriers. For example, WhatsApp also announced a partnership with Dutch wireless carrier KPN to launch a WhatsApp-branded mobile service in Germany under KPN’s subsidiary there, E-Plus.
“The trend is that people do not converse as much over the phone as they used to,” Mr. Burke said. “It's quick bursts of back and forth and multiple conversations at once.
“I think WhatsApp will apply voice, sending quick voicemails and jumping on a call chat with friends,” he said.
“The reality is that Skype and Google Voice have Internet-enabled voice services and people use these to converse with friends and family versus pay the carriers, but it hasn't been massively adopted yet. This could change that as people look for ways to not use the carrier-provided voice plans.”
Chantal Tode is associate editor on Mobile Marketer, New York
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February 26, 2014 at 2:33am