On Monday 7th August Rakuten, parent company of Viber, announced that second quarter revenues of the OTT player had increased by more than 90%. User numbers had grown by almost 100 million since June 2016, an increase of more than 10% year on year.
Global users growing
To place this in perspective, Viber now has almost three times more users globally than Vodafone has subscribers. Viber launched at the end of 2010 and is less than seven years old.
With increased investment in 5G networks required and many operators needing to double data capacity annually, the debate about what constitutes fair competition and who pays for the next generation of fixed and mobile networks is bound to resurface, says Andy Gent, chief executive of Revector.
In the early part of 2016 Sandvine revealed that 37% of all internet traffic in the US was as a result of Netflix, while more than half of all traffic was OTT video. Any degradation in the delivery of video content is bad news for Netflix (customers get poor service and buffering) but also for the local internet service provider – who will likely get blamed for at least some of the service issues.
Despite its huge demand for bandwidth, Netflix does not need to contribute to the infrastructure that ensures its service is successful. The same is true of Viber in the mobile world.
Fair competition?
Very few network operators or service providers would argue anything other than OTT apps are “fair competition” for traditional telecommunications service providers. If someone prefers to use Skype, WhatsApp or Viber for calling or messages, fair enough. But the growth in the users of some of these services now threatens operators’ ability to generate the revenue that will build the next generation of networks for OTT players to use. This would be bad news for all parties.
In the meantime, Viber is now the official communications channel of Barcelona FC. Arguably the biggest football club in the world (said grudgingly from a Manchester United fan), has teamed up with the OTT service, providing global exposure to a new connected audience.
Unfair competition?
Buried deep in the Viber app is a setting called “Viber-In Calls”. It states, “Receive regular incoming calls with Viber when possible”. Most users would never find it unless they knew where to look, less still know what it means. However, since it is defaulted “on” when you download the app, they may notice they are receiving a lot more Viber calls – even from people that have previously called them via a mobile to mobile call.
This little gem of ingenuity enables Viber to terminate traditional telephone calls – even from people that have initially dialled them using the calling function and not via the Viber app. It also acts as a marketing tool for Viber. Let’s face it; we all tend to call people back on the platform they called us. I use Skype primarily for business messaging and WhatsApp for personal stuff. But if someone calls me on Viber, I call them back on the same.
This little setting potentially represents a significant blow for operators. If Viber can deliver calls, keeping the call termination revenue, a significant proportion of operators’ revenues is at stake. The irony that this could damage the networks’ ability to build better infrastructure in the long term, damaging both the network and the OTT players that rely on it seems to have been lost to date. I suspect it will not be lost for long.
The author of this blog is Andy Gent, chief executive of Revector
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