Data is therefore the source of revenue growth, but data also contributes to the cannibalisation of traditional ?legacy? SMS and voice revenue streams by facilitating Over the Top (OTT) mobile messenger apps such as WhatsApp, WeChat and LINE.
OTT mobile messenger apps are a very direct competitive threat to SMS revenues - given better functionality, the range of emoticons and the ability to group chat?so long as both/all parties in the chat have smartphones. Thus, as soon as smartphone penetration rises, SMS revenues come under immediate threat.
In addition, the global scale of OTT communities (propelled by smartphone growth), the level of stickiness / critical mass market-by-market and the advent of OTT voice puts a larger pool of telco revenues at risk of OTT cannibalisation. With 3G and 4G networks and smartphone penetration expanding, this threat is only likely to grow. We note that the level of interactivity of users with apps such as WhatsApp is also far higher than that ever achieved by VoIP operators such as Skype, making OTT voice a more credible cannibalisation threat. With 4G data speeds in particular, the quality of voice over WhatsApp is improving dramatically.
Given that the cost to the consumer of making an OTT voice call is cheaper than the cost of a voice call, customers who are on 'pay as
you call' plans rather than bundled plans are financially incentivised to make calls over OTT voice apps.
