Facebook inc recently introduced the ability to make voice calls directly on its Whatsapp mobile application. This is currently available on Android OS and soon to be made available on iOS.
What this means is that mobile users with the updated app can now call each other by using available data channels such as Wi-Fi or mobile data. Going by a recent tweet by a user who tried to use the service on Safaricom, the user claims that they made a 7 minute call and consumed just about 5MB’s of data. If these claims are true, then it means that by using Whatsapp, a user can call anyone in the world for less than a shilling a minute. This is lower than most mobile tariffs.
Is this a game changer?
Depends on who you ask. First lets look at what happens when you make a Whatsapp call. When a user initiates a call to another user over Whatsapp, both of them incur data charges, in the case of the twitter user I referred to above who consumed 5MBs, the recipient of the call also consumed a similar amount of data for receiving the call. If it so happens that both callers were on Safaricom, then just about 10MB’s were consumed for the 7 minutes call. The cost of 10MBs is close to what it would cost to make a GSM phone call for the same duration of time anyway. Effectively, to now receive a Whatsapp call, it is going to cost the recipient of the call. This is unlike on GSM where receiving calls is free. When the phone rings with an incoming Whatsapp call, the first thought that crosses a call recipients mind is if he/she has enough data ‘bundles’ on their phone to pick the call. The danger is if there is none or the data bundle runs out mid-call, the recipient will be billed at out of bundle rate of 4 shillings an MB. Assuming our reference user above called someone whose data had run out, Safaricom will have made 5 Shillings from the 5MBs and 28 shillings from the recipient. A total of 33 shillings for a 7 minute call translating to 4.7 shillings a minute which is more than the GSM tariffs.
This effectively changes the cost model of making calls. the cost is now borne by both parties, something that might not go down well with most users. I have not made a Whatsapp call as my phone is a feature phone but I believe if a “disable calls” option does not exist, Whatsapp will soon introduce it due to pressure from users who do not wish to be called via Whatsapp due to the potential costs of receiving a call. That will kill all the buzz.
Will operators block Whatsapp calls?
It is technically possible to block Whatsapp texts and file transfers using layer 7+ deep packet inspection systems such as those from Allot’s NetEnforcer and Blue coat’s Packeteer. I believe an update to detect Whatsapp voice is in the offing soon and this will give operators the ability to block Whatsapp voice. The question however is what will drive them to block it? MNO’s will have no problem allowing Whatsapp traffic as it wsill mot likely be a boon for them if most of the calls are on-net (They get to bill both parties in the call). If however most calls are off-net (Like those to recipients on other mobile networks locally or international), then MNO’s might block or give lower QoS priority to make the calls of a poor quality to sustain a conversation. They might however run into problems with the regulator should subscribers raise concerns that they think the operators are unfairly discriminating Whatsapp voice traffic. Net neutrality rules (not sure they are enforceable in Kenya yet) require that all data bits on the internet be treated equally, it should not matter if that bit is carrying Whatsapp voice, bible quotes or adult content. This will mean that operators can be punished for throttling Whatsapp voice traffic in favour of their own voice traffic. This therefore presents a catch 22 situation for them. What they need to do is come up with innovative ways to benefit from this development like offering slightly cheaper data tariffs for on-net Whatsapp voice to spur increased Whatsapp usage within the network (and therefore bill both participants).
Worth noting is that it costs the operator more to transfer a bit on 3G than it does on 4G. Operators who roll out 4G stand to benefit from Whatsapp voice as they can offer data at a lower cost to them and this benefit can be passed down to subscribers. The fact that voLTE is all the rage now, Whatsapp voice can supplement voLTE and can even be a cheaper way for operators to offer their voice services on their LTE networks without further investment in voLTE specific network equipment.
In short any operator who wants to benefit from Whatsapp voice has to go LTE.
The announcement by Safaricom that it’s doing away with its unlimited Internet bundle did not come as a surprise to me. I had discussed the historical reason behind the billing model that is used by ISP’s and mobile operators in a previous blog post here in Feb 2011.
The billing model used in unlimited Internet offering is flawed. This is because the unit of billing is not a valid and quantifiable measure of consumption of service. An ISP or mobile operator charging a customer a flat fee for a size of Internet pipe (measured in Kbps) is equivalent to a water utility company charging you based on the radius of the pipe coming into your house and not the quantity of water you consume (download) or sewerage released (upload).
What will happen if the local water company billed users by a flat rate fee based on per-centimeter radius of pipe going into their homes rather than volume of water consumed? A user with a pipe of radius that is 1% more than the neighbor enjoys 2% more water flow into their house (do the math!). The problem is that their bills will not differ by 2% but by 1% based on the difference in radius of the pipes. A 2% difference yields a 4% difference in consumption but a 2% difference in billing. The result is that a small group of about 1% users end up consuming about 70% of all the water. This figure is arrived at as follows: A marginal unit increase in resource leads to a near doubling of marginal utility. This is a logarithmic gain (Ln 2=0.693 which means that 69% of utility is enjoyed by about 1% of consumers) . This is the figure issued by Bob Collymore the CEO of Safaricom who said that 1% of unlimited users are consuming about 70% of the resources. This essentially means costs could outstrip revenues by 70:1. This does not make any business sense. Not even a hypothetical NGO engaged in giving ‘free’ Internet through donor funding can carry such a cost to revenue ratio. As to why ISP’s and mobile operators thought billing by size of pipe to the Internet could make money is beyond me.
Bandwidth Consumption Is Not Linear
One mistake that network engineers make is to assume that a 512Kbps user will consume double what a 256Kbps user does and therefore advice the billing team that billing the 512Kbps twice the price of the 256Kbps can cover all costs. This is not true. There are things or activities that a 256Kbps user will not be able to do online, like comfortably do Youtube videos. A 512Kbps user will however be able to do Youtube without a problem. The result is that a 512Kbps user will do much more Youtube videos as the 256Kbps user becomes more frustrated with all the buffering and stops all together attempting to watch online videos. The result is that the consumption of the 512Kbps user will be much higher than double that of the 256Kbps user. Other than Youtube, websites can detect your link speed and present differentiated rich content based on that. I’m sure some of us have been given an option to load a ‘basic’ version of Gmail when it detects a slow link. The big pipe guy never gets to be asked if he can load lighter web pages, rich content is downloaded to his browser by default while the smaller pipe guy gets less content downloaded to his browser in as much that they are both connected to the same website. The problem here is that the difference in content downloaded by the two people on 512K and 256K link is not linear or even double but takes a more logarithmic shape.
Nature Of Contention: Its a Transport and not Network problem
The second mistake that the network engineers make in a network is to assume that if you put a group of customers in a very fat IP pipe and let them fight it out for speeds based on an IP based QoS mechanism is that with time each customer will get a fair chance of getting some bandwidth out of the pool. The problem is that nearly all network QoS equipment characterize a TCP flow as a host-to-host (H2H) connection and not a port-to-port (P2P not to be confused with Peer2Peer) connection. There could be two users with one H2H connection each but one of them might posses about 3000 P2P flows. The problem here is that bandwidth is consumed by the P2P flows and not the H2H flows. User with the 3000 P2P flows ends up taking up most of the bandwidth. This explains why peer to peer (which establishes thousands of P2P flows) is a real bandwidth hog.
So what happens when an ISP dumps the angelic you in a pipe with other malevolent users who are doing peer to peer traffic such as bit-torrent? They will hog up all the bandwidth and the equipment and policies set will not be able to ensure fair allocation of bandwidth to all users including you. So some few users doing bit-torrent end up enjoying massive amounts of bandwidth while the rest doing normal browsing suffer. That explains why some users on the Safaricom Network could download over 35GB of data per week as per comments by Bob Collymore. Please read more on how TCP H2H and P2P flows work here. Many ISP’s engage engineers proficient in layer3 operations (CCNP’s, CCIP’s, CCIE’s etc ) to provide expertise on a layer 4 issue of TCP H2H and P2P flows. You cannot control TCP flows by using layer 3 techniques. IP Network engineers are assigned the duties of transport engineers.
At the end of the day, there will be a very small fraction of ‘happy’ customers and a large group of dissatisfied and angry customers. The few happy customers flat rate revenues are not able to cover all costs as the unhappy customers churn. If on the other hand these bandwidth hogs paid by the GB, the story would be very different. This is what operators are realizing now and moving with speed to implement. Safaricom is not the only one affected by this; Verizon, AT&T, T-Mobile in the US are all in different stages of doing away with unlimited service due to their unprofitable nature.
As from 1st of April, Kenya will embrace the concept of Mobile Number Portability (MNP). This is whereby mobile users will have the freedom to change operators while still maintaining their mobile telephone numbers also known as the Mobile Station International Subscriber Directory Number (MSISDN). The MSISDN is made up of the country code (CC), the National destination code (NDC) and the subscriber number (SN). Whereas the country code is one for any given country, the NDC is operator specific and is what uniquely identifies a mobile number as belonging to a given mobile network examples of NDCs are 0733, 0722 and 0755.
In Kenya, Mobile phone market share is skewed in favor of Safaricom which maintains a 75% share of the subscribers with the other three operators taking the rest. This obviously makes number portability a viable avenue in which the operators with a smaller share can rope in subscribers from Safaricom. This is especially true because most subscribers who wish to change operators at the moment cannot do so because it would mean them changing their numbers. The emotional attachment to mobile numbers is uncharacteristically strong in Kenya to the extent that not many people changed operators even when the other operators calling rates were lower. YU introduced 50 cents rate and few moved. Orange introduced a flat rate 100/= per month rate and few moved over. This has been attributed to the emotional bond to mobile numbers.
However, some serious questions about the implementation of MNP in the market have not been answered.
The first one is that not all operators are in favor of MNP. The dominant player feels they stand to lose and will not be so keen on making sure that this new process works. in December last year Safaricom CEO was quoted as saying that MNP will not work in the country because Kenyan subscribers own more than one SIM card. This line of defense is because should MNP work as planned, Safaricom will be the biggest loser. On the other hand, Airtel fully supports MNP and has even started an aggressive campaign in the print media dubbed “Ni Kuhama”to sensitize subscribers on MNP and urging them to cross over come April 1st.
If all operators are not for the idea of MNP, a similar scenario such as the one that is currently in India will also play itself here in Kenya. Indian operators have been accused of sabotaging MNP which was introduced in November 2010. Some of the complaints include operators frustrating customers who want to port their numbers to competition. Some subscribers have complained to the Indian department of telecommunications (DoT) with complaints ranging from current operator issuing wrong porting codes, dead phones on porting, to service inaccessibility after requesting for porting. The number porting process is also taking an average of seven days to be effected as opposed to the standard 2 Hrs. DOT has now summoned the operators to discuss these issues.
The presence of operator specific VAS will also pose a challenge to subscribers and the CCK needs to lay the rules on how issues cropping from this will be handled. For example, If you want to MPESA me on my number 0722-123456 because you still think I’m on Safaricom but I have just migrated to Airtel or Orange, you the sender needs to be protected from being billed for cross-network funds transfer charges because they are ten times the on network MPESA charges. CCK will need to force Safaricom to send you a warning message that I changed networks and you are about to be billed for cross network money transfer and you can either accept or decline to continue further with the transaction. This warning should be at no charge to anyone.
If this is not done, there will be a lot of confusion and apathy to the use of VAS as users will fear being overcharged. This will lead to a decline in this critical revenue stream for the operators.
The third issue is the due date for MNP is fast approaching and CCK has not done enough public education and awareness campaigns on what this is all about and the impact it will have on the consumers life. The fist impact is the consumer will no longer be in full control of his mobile phone calling expenses as he can now not estimate how much a call is going to cost him or her. This is because the certainty of if the call is an on-net or off-net call will be removed with the advent of MNP.
The other problem is many Kenyans own low end phones bought on offer from their current providers might have a problem moving across networks unless the current operator unlocks their phones to accept new SIM cards. Doing this by yourself can land you in jail as per the communication (amendment) act of 2009 which says in section 84G(1) and (2)
(1) Any person who knowingly or intentionally, not being a manufacturer of mobile telephone devices or authorized agent of such manufacturer, changes mobile telephone equipment identity, or interferes with the operation of the mobile telephone equipment identity, commits an offense.
(2) A person guilty of an offense under this section shall on conviction be liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years or both.
This fact can be exploited by your existing operator to prevent you from changing networks and should you wish to do so, you will be forced to invest in a new handset. The other side of the coin to this is operators might be forced to start offering free or heavily subsidized handsets to would be customers who wish to port.
The CCK and operators therefore need to clear the air on the issues above so as to make MNP a success. This is because its been tough implementing MNP in many countries including USA, Malaysia, India, South Africa, Thailand, Brazil and many more countries with more mature telecom systems and markets than ours.