There’s currently a battle going on between incumbent telecom carriers and Internet upstarts that effectively take the carrier’s profits by offering telecom services through the Internet.
Right now the carriers still have the advantage, but the momentum definitely has shifted. I think we’re in the beginning stages of a shakeup that will disrupt the telephone industry as much as Napster shook up the music industry and news web sites shook up the newspaper industry.
Others know it, too, which why Japanese e-commerce giant Rakuten just announced the purchase of Viber for $900 million.
Viber is an over-the-top (OTT) communications service that lets users make calls over the Internet for free, one of the challengers to incumbent telecom carriers. It currently has 300 million users. Others in the space include Skype (News - Alert), Line, WhatsApp and so many others that it would be impossible to mention them all.
Viber grew 120 percent in 2013, and it is definitely popular among those “in the knew;” almost every week I hear another friend mention the service.
Rakuten, which has been on a buying spree recently in its quest to become the world’s top communications company, needed a popular OTT in its portfolio if it was serious about its market ambitions. Viber definitely fits the bill.
"Simply put, Viber understands how people actually want to engage and have built the only service that truly delivers on all fronts," Rakuten Chairman and CEO, Hiroshi Mikitani, said in a statement about the purchase.
While incumbent telecoms are fighting OTT services, partially with their own rollout of OTT services using technology such as the Joyn, which is built upon rich communications services (RCS), they will be hard-pressed to win the war.
The viability of softswitch technology, which lets VoIP calls connect with the telephone network, has been too much of an industry disrupter. When softphones and VoIP were mostly limited to calling each other, as was the case in the early days of Skype, the technology was nifty but still somewhat limited and confined to technologically advanced users. But marketability of OTT has exploded thanks to softswitch technology, and now a generation of callers is growing up with the likes of Viber alongside its cellular plans.
The ship already has sailed on the landline for this younger generation, and anecdotal evidence suggests that it also is sailing on cellular voice minutes. Mobile data sure isn’t going away, but do consumers really need cellular voice when they have the likes of Viber?
Many consumers, and the Rakuten board of directors, think not.
Edited by Alisen Downey