Why telcos charging for WhatsApp, Skype services a bad idea

Written by The Financial Express | New Delhi | Updated: Aug 11 2014, 20:02pm hrs
WhatsAppIndian telecom is in the throes of a data revolution, which could be undermined if major players like WhatsApp are made to pay telcos.
If media reports of Trai planning to introduce a regulatory framework, including some kind of fee to be payable to telecom service providers, for over-the-top service providers such as the internet-enabled free messengers (WhatsApp, WeChat and others) and VoIP service providers (Skype, Viber et al), are correct, then the entire Indian telecom economy is likely to suffer.

First, because Indian telecom is in the throes of a data revolution, which could be undermined if major players as the ones named above are made to pay telcos and, consequently, pass on the cost to consumers.

In a price-sensitive market like India, a WhatsApp user could scale back her usage if she is made to pay for itexactly why telcos revenue from SMSs is falling as smartphone sales increase. The same logic holds for the VoIP services also.

Such reduction in usage would mean that the ARPU from spectrum-fed data services of the telcoswhich is growing at the momentwill start falling or stagnate. So, for telcos, it would be akin to killing the proverbial goose that lays golden eggs.

Second, such a fee would be crippling for web start-ups and small companies in the country looking to enter the VoIP/web-messenger domain.

In India, the gap between the charges for non-data and data services is very narrow. So, hypothetically, for telcos, every unit increase in data service usage nearly compensates for every unit fall in non-data service.

So, telcos would do better to come up with ways to increase data services consumption. The first step would be to provide a facilitating environment for service uptake.

The second would be to eventually join the game itself, like Bharti Airtel has done, launching Hike, a messaging service from the Bharti SoftBank Innovation, a sister concern.