April 4, 2014

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OTT Messaging Apps: They are here to stay

A few months back my 10 year old son smiled at me, more like snickered, when I asked him what is WhatsApp and why on earth should I be using it on my newly purchased Nexus 5. I gave in. I had to give in. After all, the phone today is really not just a device that is used to only do the traditional telephony or even the short code messages, popularly known as short messaging service or SMS for short. There is a new lady in town wooing all of us with her charm, persona and the ease of use. WhatsApp. She is ruling a whopping 450 million handsets worldwide, a number that only sounds just preposterous for something as trivial as a messaging application. Just a few weeks back, she was gobbled up by another behemoth, Facebook, for a mind-blowing 19 billion USD deal of which 16 billion was cash. Japanese e-commerce giant Rakuten bought Viber for 900 million USD, another of the WhatsApp family of messaging apps. But what is important to note here is that WhatsApp and its clones, which are generally called Over The Top (OTT) providers, are taking over not just our phones but our minds as well. These OTT messaging applications are there all over with a combined coverage of more than 700 million subscribers worldwide. Its better that I and you, if you are one of those like me living under a rock and not still using one of these OTT apps, start getting addicted to it.

But wait, there is a catch to all this. WhatsApp is all about a few people implementing a fantastic experience and bringing it to our phones. But what about the age old rhetoric about it being proprietary, its isn’t scalable, it does not inter-operate and the list goes on.  The fact is that this is really true. WhatsApp is not based on any standards, but is a proprietary, cross-platform instant messaging application for smartphones which is closed. It does not have any public API’s. WhatsApp uses a customized version of the open standard Extensible Messaging and Presence Protocol (XMPP). It works on phone numbers. All contacts in the your phone book are used by WhatsApp and then copied to its central database. In a recent article it was revealed that due to a newly discovered security flaw in the Android version of WhatsApp allows another application to upload a user’s entire database of chats to a third-party server, without their consent. This is a serious security breach. Android’s part in the weakness comes from the fact that the operating system only allows all-or-nothing access to the SD card. Any application which can read and write to the external storage can thus also read what other applications have stored there. WhatsApp not only uses that external storage to hold its database, but on earlier versions of the app, does so without any encryption at all [1].

So is there an alternative? Yes. Rich Communications Suite or RCS for short is GSMA based platform that enables the delivery of communication experiences beyond voice and SMS, providing consumers with instant messaging or chat, live video and file sharing – across devices, on any network. RCS marks the transition of messaging and voice capabilities from Circuit Switched technology to an all-IP* world – and it shares the same IMS investment and leverages the same IMS capabilities as VoLTE and Video calls over LTE [2]. RCS offers five main enablers that allows it to score over OTT applications such as WhatsApp, Viber, Line, WeChat. These are Ubiquity, Global Interoperability, QoS Assurance, Security/Privacy and Trusted Service Provider. RCS provides a platform using which not just instant messaging, but other important use cases can be covered as well. In MWC 2014, four OEM’s demonstrated the flexibility and usefulness of an RCS platform based solution.

OTT messaging apps are steadily hurting the SMS revenue of the global telecom operators. The latest figures from Singapore's Infocomm Development Authority (IDA) show that SMS messaging fell to a six-year low in 2013. Despite an increase in mobile penetration in the city state the average number of text messages sent per month shrank to 1.49 billion in 2013, down almost 40 percent from 2.41 billion in 2011. Speaking at the Mobile World Congress in Barcelona, Singtel CEO Chua Sock Koong admitted telcos face an uphill battle in the brave new world of OTT content. “ The main problem we have as an industry is we have been unable to monetize this increased demand... and [average revenue per user] has fallen over time. I think the pace of change in our industry is relentless, so clearly we can't afford to stand still .. “ [3]. In a recent interview by CNBC-Tv18, it was revealed that WhatsApp has eroded almost 1500 Crore of the total 6000 Crore India SMS market, which is nearly one-fourth !!! [4]. What is more scary for the traditional telecom operators is that companies like Twilio, Nexmo which are developing solutions that allow applications to embed text and voice within them are talking with OTT messaging app OEM’s such as WhatsApp, Viber for them to launch voice services as well. 

The road ahead may look very rosy for these OTT operators in terms of the potential of their growth, but it might not be so if the regulator steps in and asks the OTT providers to share a part of their revenue with the operators to compensate for their network usage, license and spectrum fee, etc. Chua Sock Koong infact mentioned this at this year’s MWC [3] but it created a big ruckus among all the OTT providers and was received with widespread resentment. It isn’t over yet. The battlelines have been drawn. Its going to be a war of attrition. But one thing is for sure, WhatsApp and all its lookalikes are here to stay and chances are that you might be already one of those affected by it.

REFERENCES

[1]http://www.theguardian.com/technology/2014/mar/12/whatsapp-android-users-chats-theft

[2]http://www.gsma.com/network2020/rcs/

[3]http://www.cnbc.com/id/101453992

[4] http://www.moneycontrol.com/news/market-outlook/whatsapp-to-offer-voice-services-why-telcos-may-start-sweating_1048457.html