Plan on WhatsApp calls likely to come to a dead end

Last week Tanzania’s minister of ICT, Dr Faustine Ndugulile, told a local newspaper that “the government was looking into ways of preventing loss of its revenues, occasioned by WhatsApp calls”.

According to the report, the number of international calls has fallen dramatically in the past decade, from 107.2 million calls to 27.3 million calls per quarter between 2012 and 2020, respectively. That’s a decrease of 75 percent in eight years, surely a cause for considerable concern for policy makers and revenue collectors.

Commenting on this move, Mr. Emmanuel Manase, a director at Tanzania Communications Regulatory Authority (TCRA), explained that the government is trying to find ways to offset its losses without putting any additional burden on end-users. I was impressed. What was described revealed a high degree of duty of care that’s seldom manifested in similar government regulations. Too bad that the effort is misguided in this case.

From the very beginning, international voice gateways (IGWs) have always been lucrative sources of income for both operators and governments. In Tanzania, for decades that business was monopolised by TTCL which was the only licensee in that category (Zantel had a licence for Zanzibar). As a monopoly, regardless of TTCL’s performance, it was guaranteed to collect all revenues from international calls emanating from or terminating in Tanzania.

However, when the government granted other operators with IGW licences in the mid-2000s, Celtel was the first to capitalise by launching its IGW in 2007 and was soon followed by other operators. Increased IGW capacity helped operators to become more competitive, thus making international calls more affordable.

That trend was turbocharged by the arrival of submarine fibre cable systems, Seacom and EASSY, which freed the nation from the limitations of satellite-based IGWs and unleashed huge capacity which further reduced costs. This is possibly reflected in that potential high of 107.2 million calls per quarter in 2012.

Up to that point the market was following a well-known script – up to 60 years of year-on-year revenues increase in telecom markets across the continents. But the situation was changing, and in Tanzania this was heralded by the nation’s proper entrance into the digital era through the arrival of Seacom and EASSY. Those familiar with industry dynamics elsewhere knew that the end was near for the lucrative voice business.

Unlike traditional voice services which are offered by operators, digital alternatives, such as Messenger, WeChat, WhatsApp, FaceTime, etc., generally bypass operators’ platforms and deliver their services straight to subscribers through the internet, thus the name over the top (OTT) services. These services are generally free, convenient, fun to use, and provide all the legacy services such as messaging and voice calls to users.

Moreover, as the quality of the internet increases, the offerings become more compelling, leading to greater usage. This is what has led apps such as WhatsApp to command billions of users across the world. And this had the inevitable consequence of eating into traditional operators’ revenues in mature markets, and the trend later moved to developing markets in the 2010s.

For example, between 2012 and 2020, at the time when internet penetration was less than 50 percent in the world, data traffic exploded by 740 percent while voice traffic inched forward by only 5 percent. Therefore, now, as the next 50 percent of world population join the digital world, the situation will only get worse for traditional operators. This is why Juniper Systems forecasts traditional voice revenues to fall by 45 percent by 2024, while mobile voice over OTT to grow by 88 percent at the same time.

Now, it is technically feasible for the government to control voice calls from known OTT apps through deep packet analytical systems. But people will devise new ways to circumvent those measures every day through a myriad of solutions which are becoming more popular and more sophisticated all the time. So, the government’s attempt to control this trend to protect is dwindling revenues from legacy services looks like trying to empty the ocean with a leaky bucket, doesn’t it? It is easier to sail with the wind instead.

TCRA will do well to advise the minister that this is a technological trend that will only end with the demise of traditional voice services; and that it is too late in the game to maintain the old-fashioned thinking of voice and SMS as separate services from data.

The future of telecoms is data, so both the government and the operators ought to think of alternative ways to make money. While operators are generally much more aware of this impending challenge, at least based on CEOs’ rhetoric, it is high time for the government to catch up.

The good thing is that potential for growth is truly massive. For example, while Vodacom estimates that its subscribers use on average about 1.4GB of data per month, the global average is above 10GB, and the trends lead towards 50GB for many nations already. Even a five-fold increase in average data usage in Tanzania is enough to unleash so many new revenues generating streams for everyone, especially the government.

The minister should be advised that the way forward is through less regulations and more investments in the industry.