OTT
and Telcos : A Road Ahead
How many of us send sms today? It seems to be a
yesteryear mode of communication between people through mobile phone, gradually
and slowly they have been almost completely replaced by applications like whats
app, facebook, nimbuzz , hike, skype
etc. and causing revenue loss to telcos of about $32 billion in 2013
which is estimated by analyst group Ovum to go up to $82 billion in 2020. By
using these applications people can send messages to each other at virtually no
cost using data connection hence completely bypassing the billing system of
telecom players and leading to hefty revenue loss to telcos but providing
tremendous value to the end users. These applications are provided by OTT(Over
The Top) players whose 62% board members
profile are focused on sales, marketing and strategy while just 12% on
financial matters while in telcos, 58% board members have legal, financial or technical background. Hence OTT’s are
better innovators and aggressive in terms of marketing strategies and sales and
thus have better customer engagement.
Now what are the possible options for telcos to salvage
this revenue loss? One being that they can block these OTT players to use their
data network , but this step would bring customer criticism as OTT’s are
providing high benefits to end users and telcos would lose these customers to
the telcos who haven’t blocked OTT’s leading to more revenue loss. More
feasible options for telcos would be to look for alternative ways to increase
revenue like by hiking data roaming charges or increasing charges of data usage plans as OTT applications require
data network to transmit messages .Another alternative can be to look for
having partnerships with OTT players for
providing unlimited access to their data network in return of some fees
.According to allot’s mobile trends report 26% operators already have this
revenue sharing model in place. If we consider India companies like RCom,
Aircel, Airtel, Tata Docomo have already collaborated with players like Whats
app, nimbuzz and facebook. Many more operators are to follow the same suit
while many telcos are mulling whether they should collaborate or compete with
the OTT players as they believe these partnerships wont last long due to
difference in opinions between telcos and OTT’s .Those who have decided to
compete like Airtel who has recently launched HIKE for Indian customers has
imitated service model adopted by OTT’s and has shown promise by increasing
their subscribers base to 5 million in just 4 months after its launch making it
one of the fastest growing apps globally.
Looking at the success of some players like Airtel who
have decided to compete by imitating service model others is also to adopt this
model while many global players have decided to launch services on Rich
Communicate Suite including Vodafone in Germany and Spain and TM mobile in
Germany. RCS focuses on extending the
communication options in mobile network beyond voice services and sms/mms
services. They promise to provide peer-peer communication across parties .This
is a move away from client-server paradigm used by OTT’s. This frees up both
the users and developers alike in building future communication services, not
being tied to single platform. The unique offering of RCS service model is that
it provides guaranteed quality of service since it is offered over the managed
IP network of the operators and hence is carrier grade. The model is however in
early stages and would take time to develop in India.
Overall, OTT’s have thrown some serious challenges
to telcos who are looking to get out of this trouble posed by OTT’s by
imitating their models or by looking to provide better services in comparison
to them. But looking at the past trends and because of the fact that OTT’s are
better innovators they seem more likely in outwitting telcos who seem to be short of ideas .Hence, best step
which telcos can take is to have better partnership models with OTT’s who have
a long road ahead of them.
Anuj Jain
Class of 2015
Already with 13 players in the market the operators are finding it difficult to generate sufficient profits and to add to this OTT players are worsening the situation. The best way for MNO’s will be to partner up with the OTT players so as to survive in this data driven market.
ReplyDelete-Shashank Deshmukh
Looking on the bright side, operators benefit from OTT players with the increase in 2G data and 3G connections brought about by the data-centric applications mentioned above. Telcos should ride on the success of OTT players and their innovative marketing as you have rightly mentioned.
ReplyDelete-Sandhya Vijayan