First things first. F*ck you, Airtel. The carrier that claims itself to be “The smartphone network” has come up with the dumbest business plan – to charge separately for VoIP calls outside of the data plan one is already paying the carrier. Airtel’s move is against the essence of net neutrality – the fabric of providing equal and fair access to all Internet services and content. In essence, Airtel wants to decide what consumers can access on the Internet in the data plan and for what Internet services they will have to pay extra. As a consumer, if I have bought 1GB of data from Airtel, I decide what I want to access with that data. But it seems for carriers like Airtel, there is no end to greed. Also Read - Airtel introduces new postpaid plans with more data, refreshes Family postpaid plans tooAlso Read - Airtel partners with Intel for its 5G network development: Details here
The fear of being reduced to data carrying pipes is not new for carriers but it is finally happening now. Carriers, which once controlled the gateway to expensive content in the name of VAS that was streamed to feature phones are now finding themselves turned into utility services where they only provide access for users to consume other services. This transition was bound to happen with the increase in smartphone adoption and data usage. Also Read - How to get free Amazon Prime subscription
This is a part of the statement Airtel sent out announcing new VoIP specific tariffs it plans to roll out in coming days (emphasis mine).
Over the last twenty years, we have invested over Rs. 140,000 crores in rolling out telecommunications services in every nook and corner of the country. In addition, we have paid over Rs. 50,000 crore in terms of government levies in just 5 years. Going forward, we are committed to rolling out data networks across the country. In order to ensure this, our business must be viable and sustainable. Our voice services that are enjoyed by every one of our customers provides us the capacity to continuously invest in and upgrade our networks on an ongoing basis. We, therefore, believe that VoIP services in their current form are not tenable for us as a business. As a result, we will charge separately for VoIP services.
According to this statement, Airtel is implying that revenues from voice service is imperative for the carrier to invest and upgrade its network. Notice that there is no mention of VoIP services being a burden on its network infrastructure or users clogging its networks with excessive data usage not just VoIP calls, which was the argument used by carriers like AT&T in the US in 2012 when it barred users from making FaceTime calls over its 3G network. However, AT&T too came around in 2013 after it “tested” its network.
Here Airtel’s argument is that it feels VoIP services would eat into its voice services, which would result in a loss of revenue. There’s no mincing of words whatsoever.
Now here are some key facts from Airtel’s results for the September 2014 quarter. Mobile voice realisation in India improved to 37.69p per minute (up 0.90p Y-o-Y). Mobile data revenue at Rs 1,805 crore registered a growth of 73.8 percent Y-o-Y in India, uplifted by increase in data customer base by 43 percent and higher usage per customer by 31.2 percent. Mobile data revenues contribute to 14.5 percent of Mobile India revenues vis- -vis 9.4 percent in the corresponding quarter last year.
Here’s what Gopal Vittal, Airtel’s MD and CEO for India and South Asia had to say in the earnings press release:
Airtel’s revenue growth in India has further accelerated to 12.3 percent in Q2. We continue to see strong momentum in mobile data which has grown by 74 percent in this quarter. Airtel’s pioneering 4G roll-out in 15 cities is now witnessing stronger customer acceptance. On the regulatory front, the recent TRAI recommendations on making more contiguous spectrum available in the upcoming auctions have the potential of transforming the industry. We believe that this is critical to realise the exciting vision of “Digital India” that the Government has articulated.
Here are some more facts about Airtel’s Average Revenue Per User (ARPU) – the overall ARPU from mobile services is Rs 198. However, the ARPU from just voice services is Rs 158 (5 percent decline Q-o-Q) while data ARPU reached Rs 150 (8 percent growth Q-o-Q). Airtel had approximately 40 million data users in India out of which approximately 15.5 million were on 3G. On an average, a subscriber used 563MB of data.
Even if we consider more users using VoIP services in lieu of traditional voice calling, it would also imply Airtel would have more data subscribers, who would provide roughly the same if not a higher ARPU in the long run as they use more data services. The argument that the “loss” from users shifting from Airtel’s voice service to a VoIP service is hollow at best.
Indian carriers have already lost a bulk of their SMS revenues to IM services like WhatsApp. Think about this – last New Year’s eve, WhatsApp processed 54 billion messages from 400 million users globally. In November, WhatsApp announced it had 70 million monthly active users in India alone. Indian carriers, on the other hand, charge premium rates for text messages on festivals and special occasions like New Year’s eve or Valentine’s Day.
And there’s more bad news for Airtel, which feels even more threatened now that WhatsApp is on the cusp of launching its much delayed voice calling feature. Imagine what would happen if consumers realize they can get 1GB of 3G data for Rs 249, which according to my rough calculations should be enough to make 2,000 minutes of calls ANYWHERE in the world.
Now think about this, Facebook’s acquisition of WhatsApp was closed at approximately $22 billion as Facebook stocks were trading higher at the time of completion of the deal than when it was signed. This translates into Rs 140,104 crore. Airtel’s market cap at the end of trading yesterday was Rs 141,687 crore.
Airtel’s VoIP specific data plan is currently being reviewed by the government. But regressive and greedy carriers like Airtel would do their best to ensure they get a cut out of every OTT (Over The Top) service like IM and VoIP apps. Carriers have long believed that these services wouldn’t have reached the scale without the carrier’s network and the service providers should be liable to pay for using the network.
Airtel’s VoIP data plan has been implemented to push these service providers into inking deals with them. If they won’t, Airtel would ensure consumers do, which would decrease their usage of these VoIP services as they become more expensive to use. This is Airtel’s myopic vision and leaves the door open for another carrier (Reliance Jio?) to swoop in and save the day.