Google Hangouts Dialler – the ultimate OTT threat

16 Sep 2014

Google has launched the ultimate OTT challenge in its updated Hangouts IM app that risks turning the telco into a completely dumb pipe, finally integrating it with Google Voice and SMS, all wrapped up in a slick, user-friendly, battery-efficient package.

The updated Hangouts and companion Hangouts Dialler app is rolling out across the globe except in 24 of the the more repressive countries including North Korea, Myanmar, China and Thailand.

Calls to the United States are 1 cent. Calls to many other countries such as Singapore or Hong Kong are just 2 cents a minute.

The user interface is slick with none of the VoIP app clumsiness that often accompanies contemporary SIP apps. Once the number is entered, Google Hangouts will display the cost per minute and the existing credit balance on the account right under the number, negating the possibility of bill shock or worries of cut off calls in the middle of a conversation.

Hangouts dialler will take incoming calls from Plain Old Telephone Systems (POTS) with a Google Voice subscription (currently available only in the United States) and outgoing calls will show the Google Voice number for caller ID. With Google Voice, calls within the United States are also free.

For messages, Hangouts has long offered a unified UI between the Hangouts IM and SMS contacts on Android. With a Google Voice accounts, SMSes would bypass the telco.

Hangouts comes on all major platforms not just Android. iOS and desktop browser versions are available. An incoming call or SMS will ring both the Hangouts app on the phone phone and the browser open on the Gmail account as well as leave an email message in the users’ Gmail inbox - unified communications for the masses.

For group messaging, Hangouts now works closely with Google Plus, which can be a bit daunting at first to see all the people you are following on Google’s social network appear alongside your phone and email contacts.

However, this would be a nightmare scenario for many telcos. Over The Top threats usually mean SMS revenue being lost to the likes of Line or Whatsapp, overseas voice to VoIP like Viber and Skype, but what Google has done here is totally disintermediate the telco. The primary number becomes the Google Voice number. From one unified interface, the user can call, text message, video call or group conference with anyone in the world.

Micro-payments and billing? That has been disintermediated too as Hangouts Dialler requires Google Wallet for call credit.

Asked what he thought of the new Hangouts threat, Saran Phaloprakarn, vice president of Network Strategic Planning at AIS, said that voice services were doomed to be substituted by OTT since ten years ago when the industry failed to agree on the RCS (rich communications suite) standard. Today, telcos are responding by bundling voice with data.

Allan Rasmussen, CEO of consultants Yozzo, identified one major plus side for the telcos in embracing Hangouts in light of more low-end phones with limited memory being rolled out across developing markets.

“Best case scenario for telcos would be that Hangouts gains its traction from the existing messaging app users who might see the app as being more memory friendly and more ‘native’ to their Android devices and thus can free up memory by uninstalling the other messaging memory huggers.”

“Worst case scenario for the telcos would be if Google managed to make Hangouts a popular first choice dialer over the native dialer for users who still haven’t made the OTT switch,” he said.

And how should telcos fight back? “The telcos' response to the larger messaging apps appeal and falling voice usage could/should be to provide voice and SMS as a value added service to data packages. Since almost all of them already use IP for Voice they could easily built their own app with better SIM/Number/Service integration and voice quality. Another option remains – if you cannot beat them, join them,” he said.

Can anything be done? Should anything be done? Obviously those 24 countries have leaned on Google and blocked the app from being rolled out or working, but that means are over 160 more countries in the world where it does work.

One also wonders about the timing. Google Voice development has stagnated for years without being rolled out more widely in a bid to placate telcos. Obviously Google saw that the market was reaching a tipping point and going to be cannibalised anyway and it is better they do the cannibalization and risk upsetting some telcos than leaving it to some small upstart.

Is Google Hangouts on air the Uber of the telco industry? Will we see incumbents technically and legally trying to block the app? With the new wave of Android One low-cost devices on the horizon, perhaps telcos seriously need to think of their next move before they go the way of the dinosaurs.

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