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Summary

  • The Telecom Regulatory Authority of India has rejected the proposal of the Indian telecom operators to charge Over-the-top players for using their network.
  • This will benefit OTT players operating in India. Facebook can monetize its messenger app and WhatsApp in India through mobile payments and remittances without paying the telecom operators.
  • Viber allows its users to call any number, including a non-Viber user, by charging a nominal fee. WhatsApp can introduce a similar feature once voice calling facility is available.

I had mentioned in my recent article, "Facebook: India Update" about the possible implications of the Telecom Regulatory Authority of India (or TRAI) policy on Over-the-top (or OTT) apps like WhatsApp, Viber, Line, and WeChat. The Indian telecom operators wanted OTT players to pay connectivity charges to them for using their network. Recently, the TRAI rejected the proposal of telecom operators to charge OTT apps for using their network, as well as sharing revenue with them or the government. The TRAI feels that telecom operators are able to offset their losses through growth in data revenue. One of the TRAI officials made the following statement:-

"One-third of the incremental revenue of the telecom industry is coming from data services itself. As far as the voice services are concerned, there is an upswing in the realisation rates"

This is beneficial for Facebook, as it need not charge its users for using its unbundled messenger app and the ad-free messenger, WhatsApp. Facebook (NASDAQ:FB) has 100 million users in India, while WhatsApp has 48 million users in the country. The company earns less than 0.1% of its revenue from India. Smartphone sales in India are expected to increase from 44 million units in 2013 to 80 million units by the end of 2014. The Indian mobile payment market is expected to grow from $86 million in 2011 to a $1.15 billion market by 2016. Last year, India topped the list of global remittances, with $70 billion in remittances. Facebook can monetize its unbundled messenger app and WhatsApp through mobile payments and remittances.

WhatsApp may introduce voice call facility in its 4.5.5 version. The new version will have a 4-button series, which will include options like switch to text message, call mute, directing the call through device speaker and hanging up. Rakuten (OTCPK:RKUNY) bought Viber for $900 million a few days before Facebook bought WhatsApp. Viber has over 25 million users in India, and it allows users to call any phone number across the globe, including a non-Viber number at nominal prices through its Viber Out service. The user has to purchase Viber Out credit through the application and make the payment through the app store for using the service. Viber Out credits can also be purchased from the website. Facebook can introduce a similar service in India once voice call facility is available on WhatsApp.

Conclusion

I would conclude by saying that TRAI policy is beneficial for Facebook, as it can increase its revenue from India by introducing new features on WhatsApp and its messenger app without paying any fee to the telecom operators.

Source: Facebook: India Update 2