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At the advent of the parallel telecommunication companies and broadcasting industry players, the term OTT or “over-the-top” was used for delivery of audio and video content over the network. More recently it has extended to any service or content and in a more general sense means any service available on the Internet. OTT “now” is delivery of content and services over an infrastructure that is not under the same administrative control as the content or service provider. And the providers of these services are the OTT players.
Unlike Conventional Service Providers (CSP) businesses, where the services and infrastructure are linked and network operators control the value chain, such as for MVNOs, OTT services are delivered without any affiliation with the network.
Accessing the content of OTT can be made through Internet-Connected Devices such as PCs, Laptops, Tablets, Smartphones, Set Top Boxes, Smart TV and Gaming Consoles such as the Wii, PlayStation 3 and Xbox 360. Thinking of these devices brings to mind what all these days we have been using on these devices – Netflix, Hulu, MyTv, Whatsapp, Viber, SAAVN, Google Voice, Skype and Rebtel amongst many others.
Telecommunication companies vs. OTT players?
The revenue for the telecom industry has been triggered by three main services they have provided over time. To begin with the telecommunication companies provided voice, then messaging and finally the data services – Voice and data being the winners all the way. Now, with the OTT players in the market the revenues are hit – big time. OTT services are not only consumer friendly but at no additional cost (most of the times) for the user. They can do away with messaging completely if Whatsapp, or any other free texting app for that matter, is there and everyone in the circle has Whatsapp. And for US users the idea of having Google voice or Skype on your phone is a blessing as you need not use your minutes and can always call using VOIP services.
Not only OTT provides user with the comfort of saving messaging and minutes, all it needs is Internet connection; So wherever wi-fi is available, consumer can switch to wi-fi and use the service. So your data plan usage also goes down.
OTT Threat – in hard core numbers!
As per the research conducted by mobileSQAURED for Tyntec, compared to year 2011, in year 2012 mobile operators are more vigilant about the issue of the revenue going down by the OTT carriers in view. Close to 80% of the operators are seeing OTT as a threat to their voice and messaging revenue. And within these 80% the more concerning figure is of the increasing number of mobile operators (13.5% in 2011 to 32% in 2012) who see OTT a threat to the traditional voice and SMS services. SMS was also concerned as the most service which was most impacted by the OTT providers.
Over the years the traffic movement is expected to shift to OTT usage. More than 50% of the operators believe that the OTT has effected between 1-20% of the traffic on their network.
incrementally. They can also come up with effective bundle plans where they can target customers on the needs yet again with the partnership with the OTT player.
I don’t know much about this topic but I found this article an interesting read. How do you see voice and sms over LTE playing out in this in the years to come. I thought eventually, as carriers start to build out their LTE networks they were going use that to counter some of these OTT services.
Dear Fred,
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The problem is going to be the same with LTE that is there for the telecommunication companies today. However, they might get a cue from OTT and start using it to their advantage. Coupled with their LTE capability, OTT apps by telecommunication companies might give them an edge over the OTT operators. T-Mobile have already started doing it with bobsled and CleverConnect. More operators will follow the suit.