NEW DELHI: The cannibalisation of calling and SMS services by over-thetop ( OTT ) players, or apps, such as Whatsapp and Skype could hurt voice revenue of telcos by as much as 50% going forward, forcing them to raise data rates which will in turn hurt broadband penetration in India, companies and experts say.A recent report from brokerage Credit Suisse said that threat to traditional voice and messaging business of telcos from communications apps which offer free calling and messaging using the internet is rising.It counted India as among the "most exposed" to the threat, compared with other markets such as US, Europe, Australia, China and Korea where data is a substantial part of overall revenue, and voice comes bundled as part of a data package. Indian telcos on the other hand still derive over 80% of their revenue from voice."Proliferation of over-the-top (OTT) content services such as Skype and Whatsapp amongst others could trigger a whopping 30-50% revenue hit on telecom companies' voice services in the coming months. Telco messaging revenues have already taken a 30% hit, thanks to OTT players," said Rajan Mathews, director general of Cellular Operators Association of India, the trade body representing GSM carriers such as Bharti Airtel , Vodafone India and Idea Cellular, amongst others.Ovum estimates $2.76 billion (Rs 17,545 crore) cumulative loss in SMS (and value-added service) revenue in India in the past two years due to growing popularity of OTT apps.While the research body doesn't have India-specific estimates for voice and messaging revenue losses going forward, globally, it was $54.2 billion in 2014 which is expected to grow to $63 billion by 2018."The problem is one of arbitrage. Truth is licensed mobile operators are fighting a losing battle against unlicensed substitutable services like voice, messaging and video messaging services from the OTT players," Mathews said.Unlike the apps, a licenced mobile operator in India has to pay a host of charges, including spectrum usage charges, licence fees, service tax to the government, which adds to a telco's cost. But an OTT can provide the same voice – voice over internet ( VoIP ) and messaging services for free, as they are unlicensed."This is precisely why, licenced telecom service providers cannot compete. The government must ensure the same services attract the same rules, in the interest of mobile carriers," Mathews added. Countries like France The Internet and Mobile Association of India ( IAMAI ), whose views mirror those of Facebook , Skype, Amazon and other internet-based companies, countered, saying that internet apps as intermediaries were subject to Indian laws and Information Technology Act 2000. Additional regulation would lead to hampering innovation and unintended consequences.Telecom operators also dispute a view that they are making enough money from their higher paying data services to offset the loss of voice and messaging revenue.They say, on a voice call, a telecom operator earns about 35-36 paise a minute. But, if the caller is using a mobile app to make the same call, the company gets just about a sixth, or around 6 paise, at current tariffs for data usage.IAMAI though says a VoIP call in fact costs three times more than a traditional voice call, and chat apps, which also allow transfer of music, videos and messages, were contributing to faster data usage.The association further said that the issues of high debt burden faced by the telecom industry and return on capital employed falling to single digits were "contradictory to their otherwise public claims of increase in revenue and net profits". It added that high debt was due to payments for spectrum and license fee, rather than impact of OTT services. IAMAI was reacting to the telcos' contention that a fall in their return on investment to single digits could shortchange network investments that operators need to make to expand and deepen data networks.Carriers say they are focused on adding or retaining users amid intense competition and hence, can't raise voice rates. So, the only option for them - raise data rates by 3 to 6 times to make up for the loss in their revenue due to the cannibalization by the OTTs."This in turn would hurt broadband penetration and ultimately affect the government's Digital India initiative," a top executive at a leading telco said. The Prime Minister has set a vision of 650 million internet connections and broadband speeds of up-to 2 Mbps by 2020. At present the country has close to 200 million internet connections and broadband speeds of 512 Kbps.Analysts say the OTT ecosystem has seen rapid evolution over the last year or so, which has increased the threat levels for telcos. The global scale of OTT communities have expanded propelled by smartphone growth, the popularity of the apps are increasing by leaps and bounds, attracting millions of users to apps such as Whatsapp, while the advent of OTT voice has added a new dimension. Whatsapp has over 70 million subscribers in India, more than what mobile phone operators such as Tata Teleservices, Uninor and Sistema have, and just below what Aircel has. And Whatsapp subscriptions are increasing by the minute."With 3G networks and 3G smartphone penetration expanding, this threat is only likely to grow. In addition, the level of interactivity of users with apps such as WhatsApp is, we believe, far higher than that ever achieved by VoIP operators such as Skype, making OTT voice a more credible threat," Credit Suisse said.