A leading indicator that signals the adoption of mobile VoIP is the adoption by mobile subscribers of social networking/instant messaging OTT services. The precursor to OTT service adoption is the strategic drive by mobile operators to increase smartphone penetration combined with an effective data pricing strategy. Mobile VoIP OTT usage leads to traditional mobile revenue disruption along with disruption of the national interconnect market. Mobile operators can choose to either defend against this trend, or embrace this trend and build products that incorporate mobile VoIP.
Analysis of information published in Deloitte’s Global Mobile Consumer Survey 2016 provides insight into the adoption of various OTT services across different markets, and over different time periods. We have extracted information pertaining to the adoption of mobile VoIP, social network (SN) usage and instant messaging (IM) for 13 countries located in Europe (EU), Latin America (LATAM) and Sub-Sahara Africa (SSA).
From this data we created the following two charts that provide useful market observations.
Chart 1: Relationship between mobile VoIP and social networking / instant messaging services
The following country (and region grouping) chart provides some interesting insights into the adoption of mobile VoIP and the adoption of social networking / instant messaging. The chart shows the plot of mobile subscriber adoption of social networking / instant messaging plotted against the adoption of mobile VoIP.
From this chart, the following observations can be made:
- In all countries, there is a higher adoption of social networking / instant messaging when compared to mobile VoIP; and
- Based on the country groups, we see a different adoption across the regions. Surprisingly, the EU countries show a much lower mobile VoIP adoption.
The difference in developed (EU) vs developing country (LATAM, SSA) adoption of mobile VoIP OTT service can be driven by the following factors:
- From a disposable income level perspective, the lower price of VoIP (to circuit switched) may not be as attractive / make much difference in developed markets vs developing markets;
- The price differential between mobile VoIP (using mobile data) and circuit switched calls may be much smaller in developed markets vs developing markets therefore there is less economic incentive to use mobile VoIP; and
- There are other factors such as (1) the difference in age distribution between developed and developing countries, younger mobile users adopt new services at a faster rate, (2) the difference in prepaid vs postpaid mobile services in developed vs developing countries, postpaid will have less incentive to use mobile VoIP given the bundling of minutes in postpaid plans, that can play a role in the markets.
Chart 2: 2013 to 2016 Adoption trend of mobile VoIP service
The following country chart shows the mobile subscriber adoption of mobile VoIP plotted over the period 2013 to 2016 for four countries.
The following observations can be made:
- There was significant growth in mobile VoIP adoption in Brazil and Mexico over a single year. Brazil grew by 343% from 2013 to 2014 while Mexico grew by 294% from 2014 to 2015; and
- This large jump was not seen in the two EU countries: Sweden and the UK.
It is quite possible that Sweden and the UK have not reached a critical market tipping point with the social network / instant messaging adoption that, once passed, would drive rapid adoption of mobile VoIP.
Drawing out market observations
While the base is small, the data does suggest the following interesting market observations:
#1: The 2016 adoption of mobile VoIP varies significantly between the EU countries (low) and Latin America countries (high adoption), with Sub-Sahara Africa (SSA) countries found between the two regional groupings.
- Therefore, developed country adoption of mobile VoIP cannot readily be used as a proxy for the adoption in developing countries.
#2: Social network / instant messaging adoption is a leading indicator and a proxy for mobile VoIP adoption.
- Therefore, the higher the adoption of these services, the higher the adoption of mobile VoIP can be expected.
#3: Over a three year period, the rate of adoption of mobile VoIP in Latin America (Brazil and Mexico) is significantly higher than that seen in Sweden and the UK. Various reasons can exist that drive this adoption. For example, this is possibly driven by the perception of higher prices in developing markets, or that the adoption of social networking/instant messaging has reached a critical market tipping point that accelerates mobile VoIP adoption.
- Therefore, based on the data mobile VoIP will see faster adoption in developing countries.
So what does this mean?
The market drive to lower mobile data pricing coupled with the aggressive growth in smartphone adoption will see wider uptake of OTT services. Within the OTT bouquet, the growing adoption of social networking/instant messaging services, as shown, will lead to higher mobile VoIP adoption.
We ascribe this linked adoption to social networking/instant messaging OTT services driving the following behaviour:
- Grow greater awareness of mobile VoIP availability among social networking/instant messaging users, thus educating users on the use of mobile VoIP; and
- Grow usage of mobile VoIP on the social networking/instant messaging platforms where such a service is offered.
Intuitively mobile operators recognise the competitive threat posed by mobile VoIP to traditional mobile services. Through the analysis presented here, we are now beginning to understand the complexity of the OTT threat to traditional mobile services.