February 26, 2014

How WhatsApp is Challenging Cellphone Carriers at Their Own Game

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In an announcement yesterday at Mobile World Congress (MWC) 2014, Jan Koum, CEO of WhatsApp, threw down the gauntlet with mobile carriers everywhere: WhatsApp is moving into voice.

Since WhatsApp was acquired last week by Facebook in a monster deal totaling $19 billion, this announcement puts Facebook in direct competition with popular services such as Blackberry BBM and Skype. Not to mention the actual voice services of mobile carriers.

Koum said in the announcement that WhatsApp has 465 million active monthly users – 330 million of whom use the app on a daily basis. They’ve signed up an additional 15 million users since the announcement of their Facebook deal last week. Add these numbers onto Facebook’s already massive user-base, and the social network is poised to have direct access to 2 billion people sometime in 2015.

If half of Facebook and WhatsApp users made their calls over WhatsApp’s VoIP service, it would make them the largest mobile voice service in the world.

This raises the question, what happens to the carriers? Typical plans are already providing more voice minutes for less money. Pretty soon, they may be entirely free. This isn’t necessarily bad for carriers however, because increased data usage frees up more space in the communication spectrum. Analog calls require two connections to a tower: one for outgoing audio, and one for incoming audio. VoIP calls are transmitted as data though, which is broken down into digital packets. This requires only a single connection to a tower and reduces network congestion. Even if Facebook does become the largest mobile voice service in the world, there will likely still be a place for carriers. Instead of minutes, they’ll be selling infrastructure and bandwidth, much like internet service providers currently do with wired internet connections.

Do you currently use VoIP? Would you consider switching to VoIP for most of your calls?