OTT isn't killing domestic voice (yet): Idea Cellular

28 Jul 2014

Many telcos are worried about OTT voice/messaging services cannibalizing their revenues. India’s Idea Cellular is not one of them – at least on the domestic voice front.

During a conference call on the cellco’s Q1 FY2015 earnings, Idea Cellular managing director Himanshu Kapania admitted that OTT apps were cutting into IDD voice and SMS revenues, but said domestic voice revenues weren’t suffering significant cannibalization.

The reasons: domestic voice is dirt cheap, and mobile internet penetration remains low, reports MediaNama:

“The reason, in India, it is expected to have an impact that is far lower than what impact you see in Europe, is because India currently is on 2G, and has the lowest rate. We are running at the rate of Rs 0.35 to 0.40 realised rate. And even as we speak, only 20% of consumers are using data, and 80% prefer to use only voice. So, our belief is that there will be some cannibalisation, but we don’t feel that there is significant enough cannibalisation for us to cry foul. We believe that the bigger cannibalisation is on International calling, where the rates are higher and to some degree on NLD, but on voice calls, there is far lower cannibalisation”, Kapania said on the call.

On the other hand, as MediaNama points out, the Cellular Operators Association of India (COAI) – of which Idea is a member – is plenty worried about OTT cannibalization on both the voice and SMS front to the point that it’s asked the Indian government to regulate OTT players and impose some kind of revenue-sharing regime to help cellcos cash in on such services.

COAI DG Rajan Mathews told The Hindu in May that while OTT services drive data usage, that’s also forcing cellcos to invest in network infrastructure that isn’t bringing in any additional revenue:

“… Thus, there is a need to find alternatives to monetize these services, by exploring a revenue sharing arrangement between the over-the-top service providers and telecom service providers. COAI Members believe there is a crucial need to initiate dialogue and work with the Government of India on this issue …”

That stance could also pull India into the kind of debate over net neutrality that’s already ongoing in the US, MediaNama reported last month.

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