Mobile operators face revenue dilemma with OTT services

Rating: $182 billion loss in 2012-2016 versus $30 billion revenue gain

Mobile operators are between a rock and a hard place when it comes to facing the challenge represented by OTT (Over The Top) services over the coming years. A significant number of mobile operators realise that OTT services carried over the mobile internet from service providers such as Skype, Viber and WhatsApp will eat into their voice and SMS/text revenus. This is one of the findings from research sponsored by mobile interaction service provider, tyntec and carried out by MobileSquared. It concluded, however, if operators made a move now to co-operate with OTT suppliers there are revenues to be earned from a truly integrated service.MobileSquared’s research does paint a rather bleak picture. Voice and messaging revenues should fall by $182 billion in 2012-2016 period. By comparison, there’s only a $30 billion potential revenue opportunity for operators from OTT services.

The research, which looked at data from mobile operators in 68 territories, found that 79 per cent of those surveyed stated that OTT poses a threat to traditional voice and SMS revenues.

The research forecasts that the OTT market will be worth as much as $166.5 billion by 2016, with as many as 18 per cent of mobile subscribers using OTT services by 2016, up from just 2 per ceet currently.

OTT’s major weakness, howver, lies with fragmentation. OTT providers are effectively building wall garden networks – much as mobile operators did in the early days of WAP.

There are way out of this dilemma, according to Nick Lane, chief strategy analyst with MobileSquared.

He observed,”If operators want to maximise the potential upside of OTT, whilst minimising the downside, then they need to stop burying their heads in the sand and look at how they can collaborate most effectively with the OTT industry.”

There are a range of strategies that could help operators benefit from the growth of OTT. As well as charging users additional fees for using OTT, operators can create their own apps or deploy RCSe/Joyn-based initiatives to recreate the functionality of OTT within their own networks.

However, according to tyntec, the key opportunity for operators is to partner with OTT providers to integrate mobile numbers into their services.

In this way, OTT services can be made cross-platform compatible, letting them make and receive calls to and from any phone or service, whether or not it is OTT enabled.

tyntec enables mobile operators to partner with OTT services by facilitating telephony in the cloud for OTT services with its own technology.

Mobile operators can tap into OTT revenues by providing mobile numbers, traditional voice and SMS into OTT services.

In this way, operators can access revenue share and termination fees from ‘off net’ calling, helping them to replace revenues lost to the growth of OTT.

So it really just a question of biting the bullet and schmoozing with the OTT suppliers.

Companies like 3 UK are way ahead of the opposition with firm ties with Skype already established.

About Tony Dennis

Tony is currently Editor of GoMobile News. He's a veteran telecoms journalist who has previously worked for major printed and online titles. Follow him on Twitter @GoMoTweet.
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