The shift towards telecoms becoming just a dumb pipe
With the purchasing of WhatsApp for $19 billion, the visibility of the various messaging apps has been raised (e.g. WhatsApp, Hangouts, Kik, Line, WeChat, Viber, Facebook Messenger, SnapChat, BBM, Skype). Apps like Skype and BBM have been available in some form or another on phones for years, but the key thing is that the amount of people now actively using at least one of these messaging apps has exploded over the last year; WhatsApp alone has over 400 million users and they will just continue to grow. These various messaging apps are growing more and more features which displace what your traditional mobile telecom provides you. So what exactly is needed to make your telecom company a truly dumb pipe?
Messaging apps are obviously a direct shot at SMS. It has been said that messaging apps are costing telecoms $33 billion/year in SMS fees . To me, I wish SMS was entirely an add-on to my phone plan (aside: kudos to Telus for acknowledging the decline in the Bloomberg article and that SMS will become a value-added thing in the future). SMS should cost no more than $0.001/message (that is not a typo, I meant to type a tenth of a cent). SMS is shoehorned into part of the ping your mobile phone sends to a cell tower to let it know it’s on. That means there is no added hardware costs or overhead from supporting SMS beyond routing the 140 characters from one tower to another. In other words it’s no more costly than sending an email; some have said it’s so cheap as to not even be quantifiable as a cost.
Next you have phone calls. Various messaging apps like Skype already allow for voice calls to other Skype users, and others like Hangouts support video calls. WhatsApp itself is planning to support voice calls, so free voice calls will reach a lot more people in the near future. And for these various services you can make free calls to other users. Some like Hangouts and Skype will even let you phone landlines for varying fees (e.g. Hangouts is free for US and Canada calls; iOS-only for now).
Even voicemail is covered. For instance, WhatsApp lets you leave a voicemail if you want instead of sending a message. While I don’t see this as quite a big deal if you are happy to message someone, it is helpful to get those people who like voicemail to change habits and switch to a messaging app.
How far can we take this and substitute out various features of a full-featured phone plan in Canada? Let’s compare the include-everything plan from WIND that I currently have with WIND’s cheapest plan that includes unlimited data, which cost $50/month and $30/month, respectively. I looked around and this is the best non-contract plan that included unlimited data in Ontario (Canada is one the most expensive places to own a mobile phone while having the worst service; readers from outside Canada might be surprised at some of the things I break out as a feature because Canadians actually pay extra for, i.e. caller ID and voicemail).
| Included feature in the $50 plan | Making it work in the $30 plan |
|---|---|
| Canada/US outgoing calls | Province-wide calling and WIND-to-WIND included, free to US/Canada using e.g. Hangouts on iOS |
| Canada/US incoming calls | Included in plan |
| International texting | Canada-wide texting included, otherwise use messaging app or need e.g. Google Voice if you’re in the US; available as $8 add-on |
| Unlimited data | Included in plan |
| Voicemail | Not from phone, yes if from messaging app; available as an $8 add-on |
| Caller ID | Included in plan |
This table suggests to me that an extra $20/month buys you voicemail for your phone number – which is not necessary if the person contacting use uses a messaging app – and guaranteeing you can SMS anyone in the world. If those two things matter to you then you can pay $16/month extra for both add-ons and still save $4/month. Otherwise don’t SMS internationally and actually answer your phone when you get a call (or at least answer if they call back a second time to know that it’s important). You can also just pay per SMS if you really need to send one internationally.
If you care that all phone calls to a phone number you place comes from a known number then simply pay for the call as necessary. Considering WIND charges $0.20/minute to any US or Canadian number you would need to make 100 minutes worth of calls outside of your province to a non-WIND number to spend the $20 you would save otherwise.
In other words if I wasn’t already grandfathered into the $50/month plan at $40/month and didn’t know what was going to happen to WIND in the future in terms of buyout and wanting to keep my current rate (they didn’t bid for new spectrum in the latest option and are openly up for sale), I would seriously consider just dropping down to $30/month once I had a messaging app I was happy with which provided free Canada and US calling. And the first Canadian telecom to offer a dirt-cheap data-only plan will win over the young consumers in droves.