Over the top (OTT) messaging services currently dominate in South Africa, but mobile voice will be more resistant to substitution, according to research by Analysys Mason.
Karim Yaici, senior analyst at Analysys Mason, comments on the challenges posed by OTT services in South Africa and potential operators’ approaches to capitalise on increasing OTT usage: “WhatsApp is currently the most popular OTT messaging and voice app in South Africa.
“We expect substitution of traditional messaging to increase as the user base for OTT services continues to grow,” she adds. “While this raises concerns about potential mobile voice substitution, we believe that this will unlikely be on the same scale already seen in messaging.”
Research indicates that market conditions will help to reduce the risk of usage substitution to spread from messaging to voice services, at least in the short to medium term.
* Mobile voice still represents the bulk of revenue for operators. Mobile voice traffic in South Africa is still growing, which has contributed to a slowdown of the decline in mobile ARPU – from –10% in 2014 to –3% in 2015.
* The penetration of smartphones and 3G/4G services is relatively low, which limits the network effect of OTT services and the ability of the network to provide a good user experience for mobile VoIP.
* VoIP apps provide only a minimal price advantage compared to traditional voice, at least for local calls.
Operators are advised to capitalise on the popularity of OTT services through partnerships and the deployment of enhanced voice services.
* Operators’ reactions to OTT services in South Africa have been mixed. Cell C has embraced OTT services and capitalised on this usage shift by offering zero-rated WhatsApp access for one year at no cost, but MTN and Vodacom have been vocal proponents of OTT regulations.
* In the short term, partnerships with OTT players could help extend broadband access to those who currently find traditional services unaffordable, as well as providing a better user experience to existing customers.
* In the longer term, operators could look to improve users’ experiences of their own voice services by rolling out VoLTE as LTE coverage increases.
Yaici recommends that operators also lobby the regulator to stimulate market growth and investment, for example, by requesting more spectrum to help improve network capacity and coverage.