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In the same way that streaming OTT video services has changed the way in which people consume TV, app-based video calling services are changing the way in which consumers communicate. Ovum’s latest Digital Consumer Insights survey has found that in all countries surveyed, video calling is now more popular than voice calling (also known as VoIP) on mobile messaging apps – and the gap is widening. Even in developed markets such as the US, where the overall penetration of app-based video calling (to which, for brevity, Ovum is applying the acronym VCoIP) is lower than in mobile-first markets such as Brazil and China, 47% of consumers said in the latest survey that they used app-based video calling, versus 32% who used VoIP (see Figure 1). In the 2017 survey, 27% of US respondents used app-based VCoIP versus 22% who used VoIP.

Figure 1. Video calling is more popular than voice calling on mobile messaging apps
Video calling is more popular than voice calling on mobile messaging apps 
Source: Ovum's Digital Consumer Insights 2018


The age of visual communications is well and truly here. In the era of the selfie, consumers are as comfortable in front of the camera (phone) as behind it, and this level of comfort is rapidly extending into making app-based video calls, which are both personal and work-related. Given the almost universal penetration of messaging apps, and the fact that telcos have so far largely failed to provide a network-based video calling service that appeals to their subscribers, it looks increasingly likely that video calls will remain primarily app-driven. This is bad news for telcos, because in addition to overtaking VoIP in terms of usage, VCoIP will also cannibalize telcos’ traditional voice traffic and revenues, which are already starting to fall under the onslaught of VoIP. If that happens, then traditional voice calls may be relegated to a fallback service and, at worst, become a communications relic. At this point, telcos’ worst fears will be realized, in that they will be reduced to playing a supporting role in the communications market.

Not only does the rise of VCoIP threaten telcos’ traditional voice revenues, it also highlights that telcos have ceded control over the development of new types of communication services to the messaging app providers. Telcos need to decide whether they can viably develop their own network-based video calling services – some telcos already have, but these services are prohibitively expensive by comparison to VCoIP services – or to accept the inevitable and bow out.

But telcos should also take heart: Ovum expects there is still longevity for telcos in providing voice and SMS – after all, SMS is still around almost 10 years after the launch of WhatsApp, which was initially regarded as an SMS killer. The survival of SMS has a lot to do with addressing fragmentation between different messaging apps, acting as a common communications layer between users of the different apps, and the same will apply to voice. Telcos have another significant advantage over messaging apps: their contract with the customer, by which they provide network connectivity (including the mobile broadband which underpins VoIP and VCoIP) and through which they can insulate against cannibalization by providing service bundles that include unlimited voice and SMS, as well as data. Finally, the GSMA’s Rich Communications Services (RCS) may provide a glimmer of hope that telcos can eventually launch their own VCoIP services using native or downloadable RCS clients that comply with the RCS Universal Profile specification; the specification allows for the provision of IP-based video calling.

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