Image: Jakraphong Photography / Shutterstock.com
Last week, WhatsApp announced encryption on all messages across their billion-plus subscribers worldwide, meaning that users can send and receive messages without worrying about who might be intercepting the content. This has caused excitement with those who support improvement to free speech, and consternation with those who worry about national security being hampered by making interception of messages harder. How this lands in countries such as India and the US will be intriguing as they have frowned upon encryption by others, such as Apple and Blackberry.
Setting that particular debate aside, what is interesting about WhatsApp is how step by step it has carved out a niche for itself with clever functionality to enrich the messaging experience like no other. In general, messaging happens either over the internet or switched through the network. WhatsApp is unique because it sits in between, using the internet for communication but relying on numbering and device information to authenticate the user. Here is why WhatsApp has created a role for itself as a provider of very specific messaging functionality: Numerous OTT players offer messaging over an internet connection. As long as the user is logged into the app, they can send and receive messages. But sending a message requires logging in, opening up to all sorts of other distractions, and selecting the messaging function. Messages can only be sent to users who are connected to you in the social medium itself. Conclusion: Messaging is laborious and time-consuming and more relevant to people using the app for social media who then decide to message, rather than message-sending in its own right. You may want to message all sorts of people, but not be on social media with them – the sets don’t coincide.
Telcos provide messaging over the network, known as text or Short Messaging Service (SMS). SMS has been a mainstay for over a decade now despite recent stagnation as WhatsApp, BBM, Viber and other alernatives substitute it. SMS has made operators lots of money (a European mobile operator once reported that 10 percent of its gross profit came from SMS, which represented only 2 percent of revenue), but it is shocking that little has been done to enrich the service. Conclusion: SMS works but it is cumbersome and outdated, requires opening up a phone book to locate users, and does not facilitate group messaging, sending videos, sound files or photos.
WhatsApp offers distinct advantages over both OTT and telco services. Here are six key differentiators: Messaging focussed, directly addressing our need to chat without distractions, intelligent information that enriches the service, such as letting you know when a message is delivered, versus when it is actually read easily lets us create and personalise groups, is mobile-enabled and not PC- or tablet-enabled, suiting users on the move or who want to message discreetly during meetings, or gatherings (ie most of the time), you receive far less junk than via SMS or social media, as there is no easy way you can be reached on WhatsApp without someone having your number. It is free, saving users money, especially on international communication and video sharing.
Being a core messaging tool now, WhatsApp should be looked at as an essential asset in any communications provider’s armory. Until it is evident what Facebook wants to do with WhatsApp, one question remains unanswered: Why isn’t the telco industry making a play to buy it from Mr Mark Zuckerberg, or at least to partner with him in delivering a specialised WhatsApp service to their customers? Telcos could monetise WhatsApp services to enterprises due to encryption, arguably better than Facebook ever could, and eat into intra-firm, principally PC-based messaging such as IBM Sametime from which telcos make little money today. They could also enable WhatsApp to more easily phase out SMS rather than watch it die, by looking for ways in which they could at least gain some sort of subscription revenue from it, and also by working to ensure more volume substitutes to WhatsApp rather than to alternatives such as Viber.
Mr Zuckerberg paid around $19 billion for WhatsApp just over a year ago. Analysts have said it isn’t worth that much to Facebook, by a long shot. But in my view, it should be worth considerably more than that to a consortium of the biggest mobile operators in the world who could either buy it outright or pursue options to run an enhanced version of it for their customers. But therein lies the conundrum – it is only worth that much to operators because they’ve got that much sitting in invested positions in the market already. Even if the industry wants to buy, Facebook might not be interested in making a quick buck today, for the prospect of really giving operators something to worry about in a few years’ time.