The telecom industry has changed substantially in the last decades. This was in large part due to external messaging and calling apps, also called ‘Over-The-Top’ (OTT) services, that use the Internet to make calls and send messages. These services have made messaging and calling much cheaper for the user. The average user sends about 1.200 WhatsApp messages every month. Imagine sending these back in the days, when a text cost €0,20. It would have cost you €240 a month! And this while the cost of a text to the company is less than a cent. In other words, the traditional calling and messaging services were a great source of revenue. The telecom industry claims to have lost 386 billion USD in revenue to OTT services.
For our analysis, we looked at WhatsApp versus Facetime and iMessage. WhatsApp is a smarphone application that allows you to send messages, audio and video through the Internet. It identifies people through phone numbers rather than having to register for a fully separate account. FaceTime and iMessage is an Apple application that enables users to make video and audio calls over the Internet. If you know another Apple user’s phone number or registered email address you can make unlimited calls. These new services were advantageous in many ways. They are of course much cheaper, since you only pay for data. Also, they include more functions, such as group chats or calls and location sharing. Finally, OTT services are great for travelers who can now make international calls for free using Wi-Fi.
Let us now compare the two services to each other. WhatsApp is owned by Facebook, while iMessage and FaceTime are owned by Apple, which have very different business models. WhatsApp has the most users, with one billion users since this year. iMessage and FaceTime are pre-installed on all Apple devices, which also means that their use is restricted. However, this might be an extra incentive for people to buy an iPhone, thus a positive point from Apple’s perspective.
Finally, what do we think will happen in the future? It is clear that OTT services such as WhatsApp and FaceTime and iMessage are taking over the market. Even though telecom companies would like to keep their system of bundling calling and messaging with Internet service, this will likely change. At some point, we expect everything to be Internet-based, and all services will be merged so that you no longer have a separate phone bill and Internet bill. However, telecom companies might respond in different ways: they might be reduced to just the pipeline for Internet, or they might develop competing apps of their own that will form one integrated service. Either way, data access will keep improving, and it will likely become possible to have Internet anywhere in the world without needing to switch SIM cards. Also, the pricing model will probably be based on more, smaller transactions rather than long-term subscriptions. Either way, telecom companies will need to adapt in order to survive. The only certain winner is the consumer.
By Eva Siccama (381230),
Gaston van de Weijer (374902),
Ge Jiang (386449),
and Beibei Wu (457617).
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