[ajaypjayaraj]

Talking about the operator's investment...

We use 3G network and often find that when users increase the speed drops to almost 2G speeds. Doesn't that make it obvious that the network (investment) is insufficient for the connections provided (returns). Doesn't that mean - less investment and more returns? Wonder if the loss calculated/projected is taking these things into account.

[drsingh]

Originally Posted by a4anurag

The network provider looses out on the SMS subscription that we all would have taken if WhatsApp etc wasn't there.

Hence they are against WhatsApp also.

Anurag.

This is innovation making an old and expensive technology obsolete. The party days of telecom/Mobile companies are over. They had chosen short term monetisation over innovation for long. "VAS", ringtones, astrology, dating tips, sms packs, marketing calls, expensive 2g data, barely enough coverage. They didn't bother getting into Internet innovations that naturally follow data usage, rich messaging apps, mobile payments, ecommerce, utility payments, cloud storage, etc.

They choose to be dumb pipes just like highways. Highways can collect tolls and increase them over the years. But real money will be made by value addition along the highways. Hotels, restaurants, amusement parks, real estate.

[kiku007]

Look who's crying! This is what happens when an Industry as such doesn't innovate and strives on milking customers with obsolete tech.

MMS has been in vogue for long but it never really took off. Why? Because Telcos were charging absurd rates and Users gave it the cold shoulder. Are whatsapp and MMS too different?

And even now, do you think it costs Rs.1 to transmit an SMS? Hell, no. Not even a fraction of that. Then why did the Telcos charge that amount for years?

And let's not even get into the ridiculously priced VAS like Ringtones and Callback/Caller tunes

So, it's payback time!

Once in a while, some Start-ups strike gold with an innovative idea and cash out, like Whatsapp and their Billion$ Sale to Facebook. No one even cares about their operating profit. The money FB paid to acquire Whatsapp and instagram is the price FB paid for not building their own Whatsapp or Instagram. So it would be stupid for the Telcos to run behind them because some of them cashed out.

[Steeroid]

Originally Posted by kiku007

This is what happens when an Industry as such doesn't innovate and strives on milking customers with obsolete tech.

1. I do not represent 'the industry', especially not the one here in India. I am an interested observer and not an insider.

2. The rates in this country are already rock-bottom - they can (and must) only go upwards for the industry to survive here. This is a given.

3. If you want to work out the actual cost of an SMS, I can provide you with rough details in private - there is a cost, and therefore there is a charge. What they charge for it is another matter. In any case, SMS revenue isn't high on anyone's agenda.

Its too early to say if its payback time. The fact is that none of these OTT services can exist if the telecom operator cannot exist viably. It is naive to pit one against the other because the former requires the latter, but the latter has a revenue stream even without the former.

Eventually even the OTT players will have to start charging once they become mainstream, and once the VC money dries up. You're right in that nobody cares about their operating profit - for now. But those who have invested $ are not doing so for charity, and will want returns eventually - at which point you will start paying for them.

There is no such thing as a free service - the cost will materialize eventually (after you're hooked to it), and that is a fact of business.

Originally Posted by drsingh

This is innovation making an old and expensive technology obsolete.

I'm sorry but I fail to see anything innovative about a business that involves providing services for free - somebody is funding the business and that someone (or the eventual buyer) will expect returns on investment. These businesses cannot be sold over and over again at higher prices for people to make money without ever charging for their services.

Valuation works upto a certain point, but ANY business has to make revenues eventually. Else its a charity, and these days even the charities show operating profits.

General comment:

However if the overall feeling is that "free services" are viable in the long term and will continue to remain 'free', so be it - I do not aim to change anyone's beliefs, but am merely trying to throw light on some fundamental facts. Therefore if and when you all eventually have to pay for these 'free services', please remember this discussion. Until then, may your faith be your saviour.

[HillMan]

Whatsapp has always been free. At least on android, that too without any ads or tickers.

As for the Telecom companies, they are already making big bucks with internet packages. Rounding off to nearest 10KB at every connection drop. You actually pay more than actual data usage. Also the package costs are not low by any standards for the speed you get.

In my opinion, this is not something that can be controlled by the govt or anyone.
Either they have to block all messenger services at ISP level on their network or leave it as is.

If one messenger goes, there is always another one

What about smartphones connected to internet by nearest WiFi ?

[phamilyman]

Steeroid,

In the interest of full disclosure you should ideally mention if you work with a telco - it sounds sure like you do.

My wife has worked with two of them in new product development a few years back. The problem is very simple: Telcos such as tata docomo have led the reduction of the prices of data to unsustainable levels (bit better for leaders like airtel) - end customer rates are often close to or below cost, depending on operator. After factoring in some of the license fees, operators don't make money. Voice rates have anyways been rock bottom for a long time.

Whatsapp has long back eaten up the market for global messaging (you can google up % of international messages carried by them). now even within the country, people are messaging each other more than over SMS.

The big game changer is voice apps like viber which in the last couple of years have started taking away a sizeable portion of the voice traffic, especially in the lucrative ISD segment.

Both of these trends undermine the very basis of the telecom operators - voice and messaging. What will they run on now? Those stupid "friendship lines"? They need to redefine their business model.

There are two options:
a. Redefine their business model as mere bandwidth providers - like home internet companies. This takes pretty much any usage based upside out of their hands and makes it a dull business.
b. Try and lobby TRAI to make money off individual apps' usage. Its practically unworkable given the pace of technological change, but hey, it doesn't hurt to TRAI, right?

Do note that the second model is required for streaming apps like Spotify where carrier support is critical to ensuring a quality end user experience. For things like whatsapp, not really.

PS: What they miss is that there are customers in India who don't even have data plans and just use their house / office wifi - even with fancy phones, just like Hillman said!

[condor]

Charging for the OTT services will need involvement of all parties ?

Steeroid : Eventually even the OTT players will have to start charging once they become mainstream, and once the VC money dries up.

Whatsapp seems to have become quite mainstream already. Pretty much every one seems to be on this now.

[phamilyman]

Another thoughts - its this regressive thinking that kills the ecosystem.

Blackberry has always had Skype. They never released it outside of a couple of operators - Verizon etc who had revenue sharing agreements with Skype in place.

Net result: when iPhone / Android offered a completely open ecosystem, BB was relegated to history.

In today's market, especially in India, no one will agree to this pricing model. If that means data rates need to rise - so be it.

[tsk1979]

Its look like greed of Telcos is not just confined to the western world.
I already pay for 1GB data. What I transmit with that data should be my wish. Telco is nobody to say what kind of packets that 1GB can contain.

Selectively charging services just shows pure greed and corruption. I always suspected, that telcos are the worse kind of corporations out there, and developments all over the world(like net neutrality shakedown in west) only reconfirms that belief.

I guess we were living in a fools paradise. Here Telcos think nothing of injecting ads into served webpages(MTNL), or running transparent proxies, as well as blatant traffic shaping.

Now they have found another revenue stream. Very soon, we all are going to need a VPN offshore

[gsurya]

Call/data charges in India are one of the cheapest in the world thanks to the previous Govt's policies.

Then Supreme Court ruled all licenses must be auctioned, so Telcos will now have to recover their huge investments from the junta somehow.

TRAI should not interfere in pricing policies, if some stupid Telcos want to charge for Viber/Whatsapp they should allow it, its up to the consumer to choose the best cost-effective provider.

TRAI mandating pricing policies for all Telcos is not right, they should allow Telcos to follow their own policies & only watch for scams & cartels.

[binand]

Originally Posted by Steeroid

Eventually even the OTT players will have to start charging once they become mainstream, and once the VC money dries up. You're right in that nobody cares about their operating profit - for now. But those who have invested $ are not doing so for charity, and will want returns eventually - at which point you will start paying for them.

That is not a given. Many online companies have revenue streams that don't involve directly charging individuals for their services - Facebook is a prime example. They have developed alternate revenue streams by ad inventory sales and virtual goods sales. I am sure for services like WhatsApp such revenue streams will open up. For example, most banks in India offer "SMS Alerts" at a cost to them, usually by tying up with another service provider. Now consider a WhatsApp based service that offers the same thing. I can see at least two things that would interest the bank - (a) multimedia-rich messaging, and (b) interactivity. Pricing needn't be too different than the SMS-based service.

Originally Posted by Steeroid

There is no such thing as a free service - the cost will materialize eventually (after you're hooked to it), and that is a fact of business.

Yes, but in an intangible way like the "you-are-the-product" metaphor usually attributed to Google/Facebook.

One should also remember that building a service like WhatsApp is not too difficult (relatively!). Indeed, there are probably half a dozen more available already. If one starts charging users directly there might be a mass-exodus to the next one that is free.

Originally Posted by Steeroid

I'm sorry but I fail to see anything innovative about a business that involves providing services for free - somebody is funding the business and that someone (or the eventual buyer) will expect returns on investment. These businesses cannot be sold over and over again at higher prices for people to make money without ever charging for their services.

Well, there are any number of businesses that connect two parties and charge only one (free for the other). As long as the cost is absorbed, the feeling of "free service" will be there. For example - house brokers charge only the renter and not the landlord. Classified magazines charge only the advertiser and not the subscriber. Google charges only the advertiser and not the searcher.

Originally Posted by Steeroid

However if the overall feeling is that "free services" are viable in the long term and will continue to remain 'free', so be it - I do not aim to change anyone's beliefs, but am merely trying to throw light on some fundamental facts. Therefore if and when you all eventually have to pay for these 'free services', please remember this discussion. Until then, may your faith be your saviour.

The mobile service provider can raise data charges. What's stopping them from doing that? Also, I see you are on the carrier side of the net neutrality debate; are you involved in the industry?

[aaggoswami]

It sounds a bit weird that TRAI has to now ensure that telecoms are not making loss! What a wonderful job.

Is there any update from TRAI on service quality ? Or lets say, emm, the actual speed end users get ?

If its TRAI recommending to charge whatsapp, etc., then it seems TRAI has surrendered to any existing cartel of these telecoms. We, the end users, never really get proper service, so forget our call charges being the lowest. The overall service quality is also at rock bottom. The errors like accidentally implementing caller tune, etc. are known to many of us.

There is no reason for any end user to seriously sympathize with the Telecoms. Try calling any toll free help line number ( e.g. 121 for Airtel ) and you will come to know the level of service they are ready to offer.

Has TRAI issued any guideline that so and so minimum internet speed has to be made available to all those who have subscribed to net ?
To cut short the point, TRAI is acting on behalf of telecoms, not customers, which decimates its very purpose of existence.

[sa_kiran]

This has been the case in Canada, at least. I know of a friend who stopped using WhatsApp.

Telcos seem to be the Bajaj Scooter, which never improved, till forced by external circumstances. Telcos should charge sensibly, then customers will use the services. One of the examples is international roaming; outgoing call charges ₹175 per min. If it had been reasonable, say around ₹50, I will use it. Since it is so high, I end up using Skype (over Wi-Fi of course, because data charges are much worse). The telcos lose out!

The telcos may block WhatsApp successfully (start charging). Some other innovative technology will come up in future, telcos will block/charge again. Instead of this negative mindset, they should start thinking how such innovations can co-exist with their investment, while benefiting customers, and they continue to make profits.

[CrAzY dRiVeR]

I'm surprised people think services like whatsapp are 'free'! Would Facebook acquire a company giving free services for 19 billion dollars if the projected returns would not have justified the investment?

But yes- they don't have any of the traditional revenue models we all know of- like pay per use, or even advertisements. However, they hold one of the biggest repository of 'real-time data' in the world currently. And that too, growing at an astonishing rate. Data so vast, we can't even think of the processing power required to make sense of it. That's where big data engines and data analytics come into the picture.

In the modern digital world- Data is a resource. Data is money.

PS- I do not work for whatsapp, nor the telcos. Above is based on my understanding of the industry and the various business models as viewed from an employee of a company that is investing big on handling digital data. Feel free to correct me if I'm wrong.

Sent from my iPhone using Team-BHP

[NetfreakBombay]

Originally Posted by Steeroid

Thats what OTT (Over-The-Top) services do today - the telecom operator provides the bandwidth and capacity for IP, paying thousands of crores in spectrum charges and then a few thousand more to set up and upgrade the network to carry all that traffic.

Customers already pay for network services provided by operators. Operators charge 300 - 1000 Rs for 3G, that should be sufficient for running the business. If customers use things like VOIP, this data usage will increase further and so will ARPU for data.

Same operator is more than willing to give 80 GB for similar amount over the copper (DSL).

So telecom operators should learn to do the business or get out of it.