How Telecom Companies May Gain As Callers Shift To OTT Apps

The sharp increase in prepaid tariffs by Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm could lead to a rise in calls made over over-the-top (OTT) apps such as WhatsApp, say analysts. But the telecom operators stand to benefit from a likely boost to data consumption and therefore revenue, as a result of higher usage of OTT calling services.

“In a plan with voice tariff hiked and data price being same, calling will shift to OTT,” International Data Corporation’s India research director Navkendar Singh said, adding that voice-over-OTT apps using Wi-Fi for connectivity could also rise, as Wi-Fi connectivity at home and public places expands.

The three private-sector mobile phone companies have recently raised tariffs by up to 40% in a bid to increase average revenue per user (ARPU), and analysts expect further price hikes, especially in voice calling rates, over the next few quarters.

Analysts at SBICap Securities concurred with the view that voice calls via OTT apps would increase, but said the shift would not be immediate. “For this behaviour to come naturally or become a habit may take some 12-18 months,” said Rajiv Sharma, the head of research at the brokerage.

Analysts added that while the minutes of usage might fall as a result of the tariff hikes, data consumption would rise since OTT calls would use mobile Internet.

“WhatsApp/OTT calls will still invite the new data tariffs, so there will be some positive impact on overall revenue,” said Rajan Mathews, the director-general of the Cellular Operators Association of India, which represents Airtel, Vodafone Idea and Jio. He, however, does not expect any material increase in OTT traffic.

However, some sector watchers have a counter view, saying that traditional voice calls might rise more than OTT calling since consumers would use data more judiciously after the tariff increase. Also, the issue of seamless connectivity over data calls still persists in many areas.

“Low-tier users might downgrade plans. This means they will have less of data which will consume on their daily data consumption. They will try to use cellular for calls to use data for other use cases like entertainment, social and gaming,” research firm TechArc’s cofounder Faisal Kawoosa said.

To ensure users stick to their services, telcos such as Airtel are rolling out voice over Wi-Fi (VoWiFi) service which is expected to improve indoor voice calling experience for users. Airtel’s Wi-Fi calling, launched commercially Tuesday, allows transition from 4G network to Wi-Fi seamlessly, without any additional charge. The service will be available in the National Capital Region comprising Delhi and its satellite cities to start with, and will be rolled out elsewhere gradually.

Rival Jio has also been testing its VoWiFi service in circles like Madhya Pradesh, Andhra Pradesh, Telangana and Kerala, the people said. However, the telco hasn’t decided upon a launch timeline.

The VoWiFi technology allows users to connect to a public Wi-Fi hotspot or any standard private home Wi-Fi network and make outgoing calls to any mobile phone number and landline, across operators, using handsets which support the technology.

Introducing VoWiFi will allow telcos to take on OTT players like WhatsApp and keep them from eating into their revenue, even as voice calling rates rise, said analysts. – Gadgets Now