Telcos revenue share from voice calls dip 80%, SMS 94%, with OTT growth in 10 years
According to a Telecom Regulatory Authority of India (TRAI) paper, telecom operators have witnessed a significant decline in revenue share from voice calls and SMS over the past decade. The revenue share from voice calls has dropped by approximately 80 percent, while the revenue share from SMS has declined by around 94 percent. This decline can be attributed to the increasing usage of internet-based calling and messaging apps, which have gained popularity among users.
On the other hand, the paper highlights that the revenue share per user from data usage has grown more than tenfold between the June 2013 quarter and the December 2022 quarter. This indicates a substantial increase in revenue generated from data services per user over the years.
The growth in revenue from data usage can be attributed to the widespread adoption of smartphones, the expansion of high-speed mobile networks, and the increasing demand for data-intensive services such as video streaming, online gaming, and social media applications. As users consume more data on their mobile devices, telecom operators have been able to capitalize on this trend and generate higher revenues from data services.
This shift in revenue dynamics reflects the changing consumer preferences and the evolving nature of the telecommunications industry. Telecom operators have had to adapt to the growing demand for data services and invest in infrastructure to support the increasing data consumption by users.
According to the latest paper by the Telecom Regulatory Authority of India (TRAI) on regulating internet messaging and calling apps like WhatsApp, Google Meet, and Facetime, the usage of over-the-top (OTT) applications for messaging and voice communication has resulted in a shift in revenue sources for telecom service providers globally.
The TRAI stated that there has been a significant transformation in the composition of the revenue basket of wireless access service providers in India between 2013 and 2022. In this period, all the major components of average revenue per user (ARPU), except for data revenue share, have witnessed a decline.
ARPU is a key metric used to measure the growth and financial performance of telecom operators. The paper highlights that traditional sources of revenue such as voice calls and SMS have decreased in their contribution to the ARPU, while the revenue generated from data services has become the primary source of revenue.
This shift in the revenue composition is a direct result of the growing usage of OTT applications for communication purposes. These apps leverage internet connectivity to provide messaging and voice calling services, often bypassing traditional telecom networks. As users increasingly rely on these OTT apps for their communication needs, telecom operators have experienced a decline in revenue from voice calls and SMS.
Data services, on the other hand, have seen significant growth and have become the dominant revenue source for telecom operators. This can be attributed to the increased adoption of smartphones, expansion of high-speed mobile networks, and the rising demand for data-intensive services.
The TRAI’s consultation paper aims to address regulatory aspects related to OTT communication services and explore mechanisms for managing the evolving telecom landscape.
According to the TRAI paper, the share of revenue from data has experienced significant growth, increasing over tenfold from 8.1 percent in the June 2013 quarter to 85.1 percent in the December 2022 quarter, per subscriber. However, during the same period, the Average Revenue Per User (ARPU) only grew by about 41 percent, from Rs 123.77 to Rs 146.96.
The data presented in the paper indicates a decline in the share of revenue from voice calls in the ARPU. In the June 2013 quarter, the revenue share from voice calls accounted for Rs 72.53 or 58.6 percent of the ARPU, whereas in the December 2022 quarter, it declined to Rs 14.79 or 10.1 percent of the ARPU.
Similarly, the revenue share from SMS also witnessed a decline. In the June 2013 quarter, it constituted Rs 3.99 or 3.22 percent of the ARPU, which decreased to 23 paise or 20 percent of the ARPU.
The TRAI paper explores the possibility of bringing Over-The-Top (OTT) players under the licensing framework, which would involve them paying entry fees, revenue share, facilitating lawful interception, providing call data records, and ensuring regulatory compliance in order to provide their services.
In the past, the TRAI had recommended that OTT players operate without obtaining any licenses. However, a Parliamentary panel on Communications and IT suggested evaluating a selective ban on certain internet calling and messaging apps to mitigate the impact of a complete internet shutdown in areas of disturbance.
The TRAI acknowledges that the shutdown of telecommunications or the internet can have significant consequences for a country’s economy and disrupt critical services such as education and healthcare. Consequently, the TRAI suggests that a selective ban on specific OTT applications and websites, which could potentially be exploited by terrorists or anti-national elements, may be preferable to a complete internet shutdown.
These discussions, recommendations, and examinations highlight the evolving nature of the regulatory landscape surrounding OTT services and the need to balance security concerns with the broader impact on society and the economy.
