Real Time Communications Featured Article

The Mobile OTT Threat & How Some Carriers Are Responding

August 26, 2014

Apple changed the game for public network operators when it introduced iTunes and the App Store, making it easy for people to get and use a cornucopia of apps, media, and services direct from their wireless devices – and without the involvement of their cellular service providers. Amazon, Google, Netflix, Skype, and a wide array of others have since hopped aboard this runaway train known as the over-the-top (OTT) movement.

Meanwhile, many facilities-based service providers have waited at the station wondering which route to take in an effort to counterbalance their SMS and wireline voice services losses, and find a new path for growth.

Indeed, OTT players have taken 30 percent of voice traffic in seven years, and now service provider voice growth is around 3 percent per year. And Ovum expects OTT to drain about $71 billion in worldwide SMS and voice revenues from the telcos between 2013 and 2016.

And that’s just for SMS and voice. The cable TV companies and telcos with TV offerings are also seeing competition from streaming video darling Netflix, which in January reported it ended 2013 with more than 44 million subscribers – more than expected according to earlier estimates.

When it comes to the OTT sensation, the writing is on the wall. So some facilities-based service providers have begun to move forward in various efforts to address the OTT threat.

Strategies on this front include everything from introducing new integrated bundles, to packaging wholesale quality of service offerings for the OTT set, to delivering over-the-top options of their own.

Bouygues in France, for example, is leveraging the OTT fring application to help world travelers avoid expensive mobile roaming charges. While the service provider does charge for fring, which involves the download of a client to the user’s mobile device, that cost is far less than what it would cost for travelers to use their cell phones without fring. And, for the service provider, fring provides a new revenue source and sticky customer experience while at the same time being low risk for the network operator.

Vodafone, meanwhile, responded to the OTT threat with the introduction of a collection of mobile service packages called RED. Not only do RED packages include data, texts, and voice, they also provide subscribers with special offers related to services from such OTT providers as Netflix.

In a press release issued just last month Cindy Rose, consumer director for Vodafone UK said: “When we launched our 4G service 10 months ago, we knew that 4G speed wasn’t the only thing our customers wanted. They wanted a reason to use 4G – which is why we

provide them with the best possible content from the best possible partners. Building on our Spotify and Sky Sports Mobile TV offers, we are delighted to now be able to offer customers the brilliant content offered by Netflix on both smartphones and tablets. And with extra data on our 4G Red, Red L and Red XL plans, customers have yet another reason to choose Vodafone 4G.”

Edited by Stefania Viscusi

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