Mobile disruptions
The number of users of mobile voice-over internet protocol (mVoIP) is set to reach 1 billion by 2017 (or one in seven subscribers), according to Juniper Research. Also known as over-the-top services, they allow consumers to bypass traditional voice calls and text messaging. They are disrupting the telecommunications ecosystem. Arthur D. Little, a consultancy, reckons that the mVoIP market will increase between $14-100 billion in 2016 (2-20 percent of total voice revenues); Skype was identified as “the most powerful disruptive force”.
Whether as an operating software specific, e.g., BlackBerry Messenger, or cross-platform third party applications like US-based Whatsapp and China-based WeChat, consumers prefer these over-the-top messaging apps because of the rich user experience and lower prices. Traditional SMS messaging is already on the decline in developed world.
Whatsapp, the four-year-old cross-platform messaging app, now processes 20 billion messages a day. The company said on April 16 that it is now bigger than Twitter, a micro-blogging site, with 200 million users. Google, according to reports, was mulling a $1 billion offer for the company.
Whatsapp is penetrating emerging economies like Nigeria where texting is popular activity. There is room for the service to expand – availability and rapid adoption of technology (i.e., broadband network and high levels of smartphones, cost, social networks) and availability of an alternative are said to be catalysts of OTT. In Nigeria, one of 10 phones is a smartphone, and by 2017 the number of smartphone users in Nigeria is expected to rise to 35 million from 5.8 million in 2012.
Because of poor quality of service, e.g., dropped calls and price of international calls, price- and quality-conscious Nigerians are embracing this alternative means of staying in touch with their network at home and abroad. Some telecom operators and phone makers, too, are embracing this change, but monetisation still remains a key challenge. Airtel, for instance, now offers unlimited Whatsapp for its Nigerian subscribers. Nokia, the ubiquitous handset in Nigeria, has introduced an Asha phone with a dedicated Whatsapp button.
Adoption of OTT services will rise together with the increase in the number of smartphone users in Nigeria coupled with efficient and reasonably priced broadband internet service (as envisaged by the broadband policy that was launched lately). Infinix, a phone maker based in Hong Kong, and two Chinese phone makers, Techno and Huawei, are aggressive about introducing low-priced smartphones into Nigeria.
Beyond mVoIP, operators also see an opportunity for fixed-line VoIP, especially for businesses with presence across Nigeria. Their spread and the need to communicate regularly are likely to push demand for cost-effective fixed-line VoIP. This line of business, compared to wireless technology, is capital intensive. Nigeria’s fixed-line network is under-developed. Fixed line penetration in Nigeria is a paltry 1.05 million – mobile penetration is 86 times greater. Leapfrogging mobile telephony is a daunting challenge few investors will dare to attempt.