So the wife has just moved abroad and I haven’t even bothered getting international calling enabled on my mobile phone. It’s not that I’m not concerned about keeping in touch with her – it’s more to do with the plethora of options to keep in touch with her than a normal phone call.
Firstly there’s whatsapp, which I’ve used for the last two years (the trigger to join whatsapp was the limit in the number of text messages one could send per day which was introduced in 2012 as a “rumour prevention mechanism”). A large number of people on my contacts list use WhatsApp, which means that it is extremely rare that i use normal text messaging to connect to them.
And earlier today, while she was waiting for a connection at Frankfurt airport, the wife asked me to install Viber, saying it allows us to talk without any international dialing cost. I just had a brief conversation with her and the quality was extraordinary (especially given i’m on a weak BSNL broadband here and she was in a car there). Then I looked at my contacts who are on viber, and the number of my contacts who are using Viber is insanely high! Almost makes me seem foolish for not joining in so far.
And then earlier today I spoke to someone in Singapore using Skype. Call quality wasn’t that great – we dropped a couple of times – but it was still pretty good. And then there is google hangouts. And then there is apple’s facetime (perhaps the main reason the iPad fell my side when we were dividing our assets prior to the wife’s move is that I could have an Apple device with me so that we can FaceTime!).
The number of options for messaging is so large that I wonder how long the whole calling and messaging model will continue. I had shown in a recent blog post (on my public policy blog) that the number of SMSs sent per user in India peaked three years ago and has then been on a secular decline. And now there is news that the telecoms regulator in India is thinking of instituting a fee on providers such as WhatsApp and Viber because of the revenue losses they are causing to the mobile phone service providers in India (like Airtel, Vodafone, etc.).
The question therefore is what the future of telecom will look like given the large number of internet based reliable communication providers who are springing up. My prediction is that the phone call is not going to die – what sets apart a phone call from a Voice over IP connection (such as Skype or Viber) is that it is “online” (i forget the technical term for it – ok got it it’s “network switching” as opposed to “packet switching” which is how the internet works).
To explain that in English, when I talk to you over the phone (normal phone call) there is a dedicated line that goes out from me to you. Basically your telecom provider and mine and the network interchange come together so that a virtual line is drawn from me to you, and this is exclusive for us as we talk (call dropping on mobile phones happens when we try to move from one “cell” to another and get lost in between).
The internet doesn’t work that way. When I send you a “voice message” over the internet, it goes one hop at a time. There is no dedicated line from me to you. The reason we are now able to voice chat online reliably is that the bandwidth available is so much that packets usually get connected quickly enough (think of a bus network so dense that you can change buses instantly to get to your destination – it virtually simulates a “direct bus”). When the network is busy or the bandwidth clogged, however, there might be some delays (while a phone call once connected remains connected).
Given this distinction the phone call offers a level of reliability that packet switching based voice messengers can never reach. And there will always be a market for extremely high reliability. Hence the phone call is not going anywhere.
The SMS, on the other hand, is again packet switched, and a mechanism in which carriers could extract large amounts of money. The SMS will soon die a natural death – kept alive only by means of government mandated services such as two factor authentication of credit card transactions.
While the fees on carriers such as Viber might become a reality in a place like India they are unlikely to sustain as international norms become uniform. What we are likely to see instead is mobile carriers coming to terms with existence of such providers, and some interesting internet pricing plans.
Currently, to use Viber for a fair bit you need a fairly high FUP (fair usage policy) limit on your phone (carrying voice digitally takes a lot of bandwidth). Carriers might introduce some kind of a graded payment structure such that they can partly recover (through higher internet charges) the lost revenues thanks to lost call charges.
If any mobile phone operator is reading this and needs help on devising such pricing mechanisms, feel free to use my consulting services. Among other things in the past I’ve done revenue management for airline ticketing and cargo (the holy grail of revenue management) while working for Sabre – the pioneer in revenue management.