Free call and messaging service WhatsApp Messenger will give its 450 million users the opportunity to make free voice calls just months after social networking giant Facebook acquired it for $19 billion.
This new development poses a huge threat to telecommunications companies when the plan materialized in the latter part of this year.
This was revealed by Jan Koum, the CEO of WhatsApp, during the MWC held in Barcelona a few weeks back. According to Koum, users would be able to make free voice calls by the second quarter of this year as it aims to reach one billion users.
A Stronger Facebook
Its acquisition of WhatsApp has strengthened Facebook’s involvement in instant messaging, which many people believe is their first foray into mobile Internet. With its planned expansion to voice services, it would move Facebook into another important feature of smartphone.
During the event, Mark Zuckerberg justified the amount being offered for a messaging feature with negligible revenues. He revealed that rival Kakao Talk of South Korea and Naver’s LINE is already making money at about $2-$3 per subscriber annually, despite being a startup company.
Reports from the media revealed that WhatsApp’s income is $20 million as of 2013. Zuckerberg revealed that independently, WhatsApp could be valued at over $19 billion.
By acquiring WhatsApp, Facebook can now focus on adding more subscribers for the next 5 years. But such moves of integrating voice calls does not auger well for telecom providers.
Free call and messaging apps like Viber, WhatsApp, WeChat and KakaoTalk have lured customers of telecom operators by giving them an option to send text messages. Ovum, the market researcher, revealed that on a global scale telecom companies make around $120 billion from SMS services in 2013.
According to Mats Granryd, CEO of Swedish telecom company Tele2, messaging and call services apps like WhatsApp offer a welcome addition to them because of the additional traffic it generates. However, the only concern of network operators is that they should be governed by similar national regulations which online companies are exempted from.
Jo Lunder, head of Russian telecommunications firm VimpelCom believes that online companies should be subjected to stricter regulations while telecom companies should be regulated much less.
Vittorio Colao, CEO of Vodafone, said he did not understand why such an important acquisition could remain unchallenged at a time when European network operators were under strict regulatory scrutiny.
According to Colao, deals like this only show that the world is changing and regulations are no longer applicable.
Not Challengers But Partners
Both Facebook CEO Mark Zuckerberg and WhatsApp CEO Koum do not consider themselves as challengers to telecom operators. In fact, they want to picture themselves as partners of network providers.
During the Mobile World Congress, Koum announced a collaboration with E-Plus, the German subsidiary of Dutch group KPN, which will be responsible for launching the WhatsApp-branded mobile service in Germany.
Recently, the European Parliament was set to cast its vote on a package proposing reforms in the telecoms market. Among the possible provisions include putting restrictions on the ability of carriers to charge online companies such as Facebook to provide enhanced services in managing their network traffic.