Despite Carriers' Views, OTT is Not the Enemy

Jim Machi : Industry Insight
Jim Machi

Despite Carriers' Views, OTT is Not the Enemy

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Last week an interviewer asked me, “How will the carriers combat OTT?” Well, from a certain point of view, OTT apps aren’t the enemy. They drive traffic on the data part of the mobile network, which drives revenue for the mobile network operators. It’s the pricing plans that are the enemy.

However, I think the root of the question was really about OTT players taking revenue away from carriers. This Ovum report excerpt references a $479 billion loss in revenues over the course of the past eight years due to VoIP OTT players. And this Light Reading blog references Ovum research, as well, indicating $54 billion lost in messaging revenues to OTT social messaging apps. 

What is one to do? First of all, as I’ve recommended numerous times, carriers should embrace the model by garnering revenue from advertisements. It’s a different model for sure, but it worked for Google. It just takes different thinking. I see ads when I play free versions of games on my iPad, but the gaming company is most likely driving that ad. The carriers themselves could do a lot more. In fact, ways for carriers to monetize OTT  was a hot topic at CTIA this year.

Secondly, carriers understand and can offer end-to-end quality of service. An OTT app isn’t oriented to understand that. Maybe the carriers could offer a higher quality of service that you’d be willing to pay for. (Depending, of course, on the right price, my friends.)

Carriers are also partnering with OTT providers or trying to create their own OTT apps. I don’t know if these are truly long-term solutions, though they are options that alleviate the burn.

WebRTC can also help. Carriers can create their own click-to-call apps and build them into the smartphones they ship, so that they can get back to owning the subscriber. WebRTC potentially gives them the power to do this again. Then they can offer priority service, as an example, maybe even going so far as to run the voice calls on the 3G network if the IP voice call quality is degrading. 

In the end, the carriers that embrace these changes and figure out how to exploit them will be better off. Just look to the Internet world for inspiration.


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