The battle for the voice call market

There was a time, not that long ago, when communication was about numbers. Calling somebody on the telephone was practically the only way to talk to somebody long distance directly, synchronously, rather than sending an asynchronous letter or a telegram. Telephone numbers were so central, so important, and literally decided who we could talk to, and required spending a little time looking in a directory or our address book, and then punch in (prior to the digital age, we would dial, a forgotten rotary concept that the average teenager today would not be able to grasp at the first sight).

Then along came the mobile phone, and address books became a thing of the past. Our brains got used to remembering only our own number, which would give to others, who would punch it into their phone. Numbers as a central element in data bases became less important, something secondary, restricted to the moment of their indexing: “give me your number”, as way of opening a channel of communication, which once begun, no longer required memory or paper.

As I have noted many times in recent days, the astonishing amount of money paid for WhatsApp by Facebook can only be understood, and then to a degree, if we see it as the final offensive against the telecoms operators’ last bastion: voice calls. This would seem to be behind Jan Koum’s announcement at the Mobile World Congress in Barcelona today that Facebook will be offering voice calls from the second half of this year.

Voice calls are an interesting redoubt: when Skype first appeared, the major telecoms operators all launched flat-rate call offers in countries where those were not yet available at the time, in a bid to prevent the momentum and value proposition of that provocative start up overtaking them.

When flat-rate calls were extended to national and local numbers, Skype no longer made so much sense as a way of substituting the calls that made up the bulk of the telephone companies’ turnover, but it still made a lot of sense for international calls: in January 2010, Skype already made up 12 percent of the total of international calls; the following year that figure rose to 25 percent, and has continued to grow ever since. Almost all of us who were sufficiently versed in technology and with the need to talk regularly with people abroad opted to use Skype.

The telephone companies soon realized that WhatsApp was going to turn their profits from texting into toast, and now also understand that the entire voice call market is about to be taken away from them: it doesn’t matter that the technology is already old, that technically this has been possible for many years, or that several companies are already offering this service; what really matters is the speed of implantation and popularity, the pace of the substitution process.

The other big question here is of course the degree to which voice calls make any money: our telephones are only telephones in name, they are mostly designed to transmit data, and we spend much more time looking at them than listening to them. And the younger we are, the more this is the case: many young people could quite happily drop their voice call plan, because they only use it to call their parents or grandparents, or in the event of an emergency.

If Facebook’s plans for WhatsApp is to disrupt the voice call market once and for all, then it may well be arriving very late to the table to take a slice of an ever-shrinking cake. Aside from finding Microsoft and its Skype there, along with Google and its hangouts, along with innumerable competitors such as Line, Viber, and others, it will discover that profits are on the wane, and that its competitors will be offering the same service for free or at giveaway prices, along with telecoms companies already resigned to losing or accepting significantly reduced profits from a source it has relied on for decades, as well as a public that increasingly opts for other types of communication than verbal.

So, it’s goodbye to the telephone number: communication when you want, and in the format you want: texts, voice, or even video, with anybody who is part of your social network. The social networks are our new address books, which we update when we synchronize our smartphone with Gmail, Facebook, LinkedIn, or all of them at the same time. Communication is based on a person, not a phone or a number; and a chronicle of a death foretold. That said, the question still remains: was it worth paying $19 billion for a place at this table?

(En español, aquí)