How the nanu app seeks to change the Internet telephony game in India

Telecom operators in India have been at loggerheads with over-the-top (OTT) players such as WhatsApp, Viber and Skype saying these apps hurt their revenue and use for free the data that the phone companies paid for. Consumers have lapped up these apps to send messages, though rarely for voice calls due to patchy data connectivity. A Singapore-based company is attempting to solve both problems in one go.

Nanu, an app that uses Voice over Internet Protocol (VoIP) technology, pays telecom companies a fee for each call made through its platform and also lets users make free calls to mobile and landlines even when data connectivity is poor.

In other words, it claims to have solved both technical and commercial issues that other OTT players have been facing in India.

How does it do this? "Our technology allows us to operate VoIP calls with very little bandwidth," said Martin Nygate, founder of nanu, which is operated by Gentay Communications Pte Ltd. "A Skype or a WhatsApp call is unlikely to work properly unless you are on an uncongested 3G or 4G network. But, nanu works perfectly well on 2G and congested and uncongested 3G, 4G, WiFi and satellite networks. We are perfectly suited for the market in India, which is a combination of 2G and congested 3G," he added.

Nygate said other OTT apps were "basically taking revenue from telecom operators" but nanu is paying the operators. "In fact, we are paying them more than users pay. We are spending around $200,000 every month on telecom companies for delivering these calls," he said. "Telcos are happy because we are paying them, and Skype, WhatsApp, Line, Viber are not paying them. That's how we are changing the environment for VoIP calls in India and globally."

Where's the money coming from?

The startup said it has developed a technology that allows it to insert an advertisement over ringtone. "Every time we make a call, there's about a 10-second gap when we are waiting for the recipient to pick up the call. Nanu inserts an advertisement over the ringtone. This is completely non-intrusive because the moment the recipient picks up the call the advertisement stops," explained Nygate.

In India, nanu has got brands like Lenskart and Oxygen Wallet, and some media agencies to advertise on its platform. The advertisement generates revenue, which is used to pay the telecom companies. However, the revenue it is generating currently is not enough to fund the payment. So it is funding the payment partially via money raised from private investors.

Nanu raised seed funding from an affluent Japanese investor in January 2014 and the Series A round in mid-2014 from Singapore-based company Creative Technology and its CEO Sim Wong Hoo. The company is in talks with investors in India to raise Series B funding.

Traction in India

Nygate said 67% of nanu's market is in India. "We are getting about 30,000-40,000 new users every day. Nearly 750,000 calls are going every day through our network and is growing at an astronomical rate," he claimed.

In India, nanu claims a monthly active usage rate at 43% and a daily active usage rate at about 20%. "Our growth is off the charts. These numbers are based on people making phone calls, and not just people accessing their apps," he said.

Regulatory walls

Nygate said he had a meeting with the Telecom Regulatory Authority of India (TRAI) and that the regulator was "very supportive".

Still, VoIP is not an easy segment to operate in and telecom operators had not so long ago blocked Indian startup Ringo from offering cheap calls.

A top official at the Internet and Mobile Association of India said that restrictions on the use of VoIP technology put an "unnecessary technical and regulatory overload" that discourages such services, slow down broadband penetration and harm consumer interest. "India is one of the very few countries where unrestricted internet telephony service is not widely available to users and licensing it will further stymie growth," the official said.

Gartner research director Amresh Nandan said that rules regarding Internet and IP technologies haven't changed much in India. He said that TRAI had in 2008 proposed to the government to allow VoIP technology unrestricted in the country, but the proposal was rejected. Last month, TRAI floated a consultation paper to resolve long-standing issues in order to make Internet telephony happen. "The fact that TRAI has once again proposed this is a proof that the regulatory authority and other people in the government are recognising the fact that this is required," he said.

"In the short term telecom companies will oppose this because their networks are not ready, their backend systems are not ready to support VoIP services, or they don't have agreements to charge for VoIP," Nandan said. "However, over a period of time, all that will come into place."

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