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WhatsApp is eating telecom (or trying to)

whatsapp india users

When WhatsApp opened up its API for transaction messages (announced yesterday), the first question that struck me was: why only this? Look carefully at the evolution of the product, and you’ll see that the rollouts have been remarkably conservative, and that they mirror telecom operator services. Which ones?

1. Messaging: WhatsApp, for the longest time, had a single point focus in being the most effective and reliable messaging service, while also bringing rich media services to it.

It has, for the most bit, replaced messaging, something which telecom operators have also acknowledged. Himanshu Kapania, on Idea Cellular’s conference call in July last year, said:

As regards customers who are high end mobile data users is there a cannibalization with voice, so the question is are these consumers using latest messaging services? Definitely lot of these consumers are Idea Cellular Limited using messaging services and definitely there is cannibalization on SMS, now have they started to use VOIP, voice services on data rather than effective circuit switch voice network? Yes, there has been some movement, I can tell you the last number which I saw which was about a month back, about 0.1% to 0.2% of our traffic is currently moving on VOIP.

2. VoIP: On another call, Kapania spoke about how quality of VoIP on 2G and 3G isn’t matching up to the quality of regular calling. Notice how while Idea Cellular is assuring investors that they haven’t seen an impact on VoIP yet, it’s something that the company is very conscious of, and is being asked about. This explains the COAI’s letter to the TRAI against Whatsapp in December 2014, and why telecom operators are pushing for licensing of Whatsapp voice. The thing with technology is: it improves, and rapidly. Given the state of networks, VoIP over WiFi now works better than voice calling.

3. Short codes/USSD and transactional messages: Another mainstay of telecom (apart from messaging and voice) has been the bulk messaging part of its business, and the ability for consumers to interact with entities via short codes and USSD. Banks and airlines pay a certain bulk rate for sending transactional messages to their customers.

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Starting this year, we will test tools that allow you to use WhatsApp to communicate with businesses and organizations that you want to hear from. That could mean communicating with your bank about whether a recent transaction was fraudulent, or with an airline about a delayed flight. We all get these messages elsewhere today – through text messages and phone calls – so we want to test new tools to make this easier to do on WhatsApp, while still giving you an experience without third-party ads and spam.

While it’s not clear how exactly WhatsApp is rolling this service out, do note that it appears to be about transactional messaging, and also allowing interactions with the entities that we transact with via SMS short codes, the way we do with banks. There are a few things to keep in mind here, and why we think this is more about transactional apps than perhaps apps that allow you to chat and order stuff:

a. Consumers want transactional messages: WhatsApp has always been extremely conservative with opening up their API. Consumers don’t want bulk sms marketing (popularly referred to as SMS spam), and WhatsApp has been conscious about clamping down on it. However, consumers want to be informed about transactional messages.

b. Transaction messages are often critical, so don’t expect a complete switch: This will be tricky for WhatsApp. While messaging via WhatsApp is as reliable as SMS, connectivity is not. Telecom infrastructure prioritizes circuit switched over packet switched, and universal availability of data connectivity doesn’t exist. It’s likely that infrastructure and data connectivity will improve over time.  Businesses will try out WhatsApp messaging in parallel with SMS for the time being, the PR opportunity this year lies in making announcements of being the first to launch with the WhatsApp API, then for the first in a segment, until nobody cares anymore. Will there be an instance of a complete switch? Not for critical apps and services.

c. Without boundaries, more secure? On the business side, the carrier independent nature of WhatsApp allows for reduction of cost of trans-national transaction SMS for brands. In India, verification SMS’s and calls often come from international numbers, and carrier networks in India are less secure (owing to government regulations) than online services. It thus makes much more sense for One-Time-Passwords to be delivered over WhatsApp, at least unless the TRAI gives into Reliance Jio’s remarkably poorly thought out demands regarding encryption.

d. Pull vs Push: It’s a lot easier for WhatsApp to enable pull messages: from a product perspective brand identities could be made searchable within Whatsapp. In the tab where we search for contacts in WhatsApp, there could be verified brand profiles with a blue tick. This way, users won’t need to save or remember numbers. This replaces SMS short codes, and could, for the time being, function in a manner similar to short codes, unless someone gets the AI required for handling queries right. That said, brands have used an unofficial WhatsApp API in the past (see this and this), before WhatsApp got it shut down with legal threats.

What will be tricky for WhatsApp, though, will be addressing push messaging. It will need to be very strict about user complaints, since even in case of SMS, the transaction pipe has been used (abused) for sending promotional content, even with regulatory directives in place. Brands want to reach out to past customers even when customers don’t want to hear from them, virtually every channel that they can lay their hands on has been abused: SMS, email, twitter, push notifications. Transactional messages are push messages, not pull, so WhatsApp will invariably have to allow them, and tweak its policies with time.

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What next?

So, messaging and voice are done, as is the bulk SMS business. What’s left is the rest of mobile VAS: live streaming, sex chat, and alerts such as job alerts. Whatsapp users already overdo videos, images, wallpapers, bollywood updates and devotional content.

How will telecom operators react?

It’s funny how we expect telecom operators to allow violation of policies (anyone else noticed the recent increase in inaction when it comes to SMS spam), and expect WhatsApp to do what is best for customers. Which is why this was surprising, and disappointing, from WhatsApp.

We also expect telecom operators to use policy changes to protect their turf: that is where the Net Neutrality debate began, with telecom operators asking for a revenue share from Internet companies. When (and not if) a TRAI consultation on licensing of VoIP is released (probably, later this year), these will all be data points in the “Same Service Same Rules” arguments, essentially demanding licensing of Internet services whose offerings mirror telecom services.

Note that it’s only WhatsApp that worries telecom operators. WeChat has had an API available for a year and half. It’s just that it doesn’t have over 100 million active users.

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Disclosure: MediaNama has taken a stand at the TRAI against licensing of VoIP and in favor of Net Neutrality.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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