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Telecom reveals number of mobile customers using iMessage, Skype

UPDATE / June 20: No wonder Telecom CEO Simon Moutter says the future is all about data. 

His company's submission on the Telecommunications (Interception Capability and Security) Bill reveals the following about Telecom mobile customers during May 2013, based on "network data":

  • 150,000 used Apple’s iMessage service 
  • 140,000 used Facebook messenger
  • 78,000 used Viber
  • 35,000 used Microsoft live messenger
  • 32,000 used Microsoft Skype
  • 25,000 used Google Talk (now called Hangouts)
  • 23,000 used WhatsApp messenger

It also quotes international research that shows:

  • In 2011, cloud-based messaging traffic exceeded traditional network-based SMS traffic. In 2013, it will more than double it.
  • Skype now accounts for one-third of cross-border calling minutes.

These so-called "over-the-top" (OTT) services let customers message or call each other from a cellphone. A phone company can get a cut of data revenue if these services are used over a cellular connection, but all work just as well with wi-fi.

And numbers are growing fast. Telecom says the number of its customers using Viber has jumped 25% since December, Skype usage by 50%.

OTT services are all free, at least in a basic form, but some like Skype and Google Talk charge a premium for calling a regular mobile phone or landline number. Telecom says these numbers are also increasing rapidly, with 20 million inbound minutes last year for the premium SkypeOut service (with all the calling revenue going to Microsoft).

And we're going to see more and more ISPs launching their own solutions, such as Orcon's Genius apps launched yesterday, which help push internet calling over a mobile toward the mainstream.

It's no wonder a recent Commerce Commission telecommunications market report for 2012 found mobile data usage doubled, but phone companies' mobile data revenue increased by a single-digit percentage.

Why would Telecom highlight the large and growing number of people using over-the-top services to avoid the cost of making a traditional mobile phone call?

Because the Telecommunications (Interception Capability and Security) Bill only defines the big phone companies as network providers - and thus obliged to make their networks interceptable, and to cooperate with the GCSB on the selection of network equipment suppliers, network design, and how customer data is stored.

Whether over-the-top providers are classed as net providers is at the descretion of the the Minister of ICT (currently Amy Adams).

As first-revealed to NBR (below) Telecom says this isn't a level playing field given, by some measures, Microsoft-owned Skype is now the largest phone company in the world.

In its submission, Telecom proposes four solutions:

  • Option A – clarify that the providers of over the top services are network operators with interception obligations
  • Option B – remove interception obligations for all network operators where the service is otherwise available in New Zealand without interception obligations and rely on the duty to assist
  • Option C – improve the proposed deem-in process so there is incentive to enforce it
  • Option D – place an obligation to develop interception capability on the true provider (e.g. Microsoft/Google) of over the top services (Telecom’s preferred option)

Government should pay half
The company also proposes, "Telecom proposes that where Government puts a network operator to extra expense to go above and beyond what the operator considers is secure from a commercially acceptable point of view (i.e. standards that its customers are satisfied with), Government should subsidise half of the cost of that additional expense."

Telecommunications Users Association CEO Paul Brislen earlier told NBR that any company that makes money from a phone network should fall under the Telecommunications Development Levy (which over-the-top providers also escaped). 

But by the same token he worries that is the government demands the likes of Apple, Google and Microsoft potentially de-encrypt their traffic, such over-the-top providers will simply give the NZ market a swerve, turning us into a digital backwater.

RAW DATA: Telecom's full submission.

Telecom's problem with intercept bill

May 21: When ICT Minister Amy Adams first outlined an update to our incept law (currently winding its way through Parliament) Telecom had a big worry.

When the current legislation was written, a phone company was a phone company, more or less.

How would the Telecommunications (Interception Capability and Security) Bill define a telecommunications these days?

A senior Telecom manager told NBR he hoped the Bill would expand its definition to include so-called over-the-top providers such as Microsoft (with its Skype voice and video chat), Google (which has its own chat product), Apple with iMessage, and Viber and countless others that offer software-based services for communicating over the internet.

He also hoped inconsistencies would be eliminated - a case in point being that if you bought Microsoft Office 365 (the cloud version of Microsoft's suite) from Telecom's Gen-i services division, then Telecom was responsible for any communications via Office 365. But if you bought the same product from Dick Smith, or direct from Microsoft over the internet, there was no monitoring obligation.

But he suspected, “That will be put in the too hard basket."

Now, the first draft of the legislation is out?

So how did it turn out for Telecom?

Not so well.

Essentially, Telecom and other traditional phone companies are defined as network operators, as expected, with attendant obligations to make their networks interceptable by the Police, SIS and GCSB (as before) and to work with the GCSB and keep it in the loop on infrastructure upgrades (a new obligation).

The Telecom manager points to Section 35 of the bill (page 31 of this PDF), which says the ICT Minister Minister "may require service providers [such as Microsoft with Skype] to have same obligations as network operators."

In other words, it's discretionary. Telecom didn't want it to be at the whim of the Minister on a case-by-case basis.

And if the Minister does extend obligations to service providers under Section 35, Section 36 lets them appeal. 

On the other hand, Section 35 is good news for the Telecommunications Users Association. Tuanz saw New Zealand becoming a backwater, avoided by the likes of Google and Microsoft, if they were obliged to de-encrypt NZ traffic.

On the other side of coin, lawyer and IP specialist Michael Wigley notes, "Some – such as wholesalers [i.e. Chorus] and dark fibre providers – will now start with reduced responsibilities." 

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Comments and questions

It's a dinosaur law that is impossible to govern.

For the bulk of people who still use the open Internet then the "network providers" can hoover up their information.

For the criminals it makes not one ounce of difference.

For less than $30 a month anyone can encrypt everything the do from files, to voice, to connections and Telecom can't read it and nor can the spy agencies.

A lot of those services don't even know what you are doing because they don't hold a copy of the key. Only you do. That means that even if you can get hold of the data as a spy agency, the provider, Telecom, doesn't have a copy of the key to unlock it.

This is leading to legislation in the US whereby they are trying to outlaw service providers who DON'T keep a copy of that key.

We are waaaay behind the eight ball and this law is a complete waste of time.

It just makes no sense to have one rule for one company (network) one for others. The Office 365 example is exactly right. What it effectively does is pushes up the cost of these types of solutions and time required to launch them compared to OTT players not caught up with LI. The law should continue to require mandatory LI support for core network communications (which are already compliant) and have a best efforts approach to more difficult solutions. The issue is that the govt knows they have no real power or chance of forcing bigger multinationals to comply.

Telecom is simply trying to turn this into a debate about OTT vs Telcos for its own commercial benefit. Next they will be suggesting the OTT providers who don't comply with the Act are blocked at the border. That approach alone will ensure the failure of UFB - a government-sponsored project. I can't see the government buying into this argument.

Besides, the fact that Telecom knows all of this information just proves they are quite capable of intercepting it. So you don't need to be the provider of a service to be able to identify and intercept traffic for that service. Interception of OTT should sit with the Internet Service Provider - it is the only practical solution.

As a Telecom mobile customer, I'm nervous that the company monitors what apps I use (either individually or even in aggregate). Hopefully they have no plans to mine this data and turn it into a new revenue source. What else are they monitoring (tin foil hat goes up)?

Given that they monitor traffic to all the OTT services makes them the logical point at which interception happens?

Anonymous: while Telecom can identify how many times particular websites or app services are accessed, it does not have the capacity to intercept apps traffic. Apps traffic is predominantly (and increasingly) encrypted and Telecom is unable to open this traffic and read the contents.