Skype and WhatsApp: Telecom Carriers are Platformed
Telecommunications carriers have been disrupted by digital platforms, albeit in a more subtle way than letter mail. Traditional telecommunications carriers are not being substituted; they are carrying more traffic than ever, as platforms have multiplied the amount of data traffic and such traffic makes use of the telecommunications infrastructures, whether fixed or mobile. Their role is still fundamental and it is not expected to disappear with digitalization.
Nevertheless, digital platforms are increasingly providing telecommunications services to the public in competition with traditional telecom carriers. What is specific to these platforms is that they provide their telecommunications services on top of the infrastructure managed by the traditional carriers. This is why they are called over-the-top players (OTTs). OTTs are creating new larger communications networks on top of the traditional telecom networks, which means that the traditional telecom carriers are being platformed.
Platforms have enabled peer-to-peer (P2P) communications. Just as platforms have enabled the exchange of music and emails over the internet, platforms have also enabled the exchange of richer communications (calls, images, and video). Skype started the provision of voice-over-the-internet (VoIP) services in 2003. WhatsApp currently provides the most popular instant messaging service in the world, empowering the interaction of more than 2 billion users.
A common characteristic of all these platforms is their usage of the internet and the underlying infrastructure deployed by telecom carriers for the conveyance of their traffic. They merely empower customers to interact with each other through software. They create network effects in the data layer, not in the infrastructure layer. In fact, OTTs do not even participate in the routing of the calls or messages. On the contrary, customers contract their own access to internet services and the calls and messages are conveyed making use of these facilities and services. Since platforms do not have to invest in expensive infrastructure or incur any cost for its use, they can provide their service for a much lower cost than traditional telephone and SMS services.
Telecom carriers have not been able to exploit their position as the enablers of the digital revolution. Communications platforms such as Skype and WhatsApp have eroded a massive amount of value out of the telecommunications market, as they transformed the industry into a multi-sided market. Furthermore, platforms built on top of mobile telecom networks have become the gatekeepers of the “app economy,” sidelining telecom carriers.