OTT challenges for telecom operators: tough nut to crack?

Telecom Lead India: Telecom operators in India are
cheering about the growing number of wireless subscribers, which now stands
above 965 million. It is certain that more numbers of mobile subscribers will
surely add on to the revenue of mobile service providers.


Being one of the largest markets in the world, the Indian
market offers huge business potential to almost every player, be it a service
provider, network gear makers, handset manufacturers and VAS players.


The focus of telcos in India is to increase the
penetration of mobile broadband given growth of smartphones in India and


The smartphone affordability has allowed wireless
subscribers to consume mobile broadband more than voice and messaging services,
however, increased access to mobile broadband is impacting the voice and
messaging revenues of the service providers, mainly caused by the OTT services
that offer free voice call and messaging over internet connection.


With affordable mobile data plans, doors have opened up
for the suppliers of over the top (OTT) services. These OTT players have been
offering messaging and voice-over-internet-protocol (VOIP) calls via smartphone


OTT services lower down the bill of consumers by
providing free services, while on the flip side these services have become the
operators’ biggest headache.


Microsoft owned Skype, WhatsApp, Viber, Google Voice/Gtalk,
Voxer and several other messaging and IP based free services have been eating
into the voice and messaging revenues of the mobile operators.



Independent OTT mVoIP providers like Google Voice,
Fring, Line2, Nimbuzz, Talkonaut, ThruTu and have also marked their presence in
the market.


According to Ovum, OTT messaging cost operators $13.9
billion, or 9 percent of message revenue, last year.


In the first quarter of 2012, minutes of usage of voice per user declined significantly in North America
(-5.3 percent), Asia-Pacific (-0.6 percent), and Western Europe (-0.4


A research conducted by MobileSquared forecasted 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
percent presently.


With such enormous anticipated growth for the OTT market,
OTT services certainly pose a threat to traditional voice and SMS revenues of


In order to vie with challenges posed by OTT services,
mobile service providers can either partner with OTT players to get some share
out of these services or they can adjust their pricing for voice and messaging
servicing to make OTT services less striking to the consumers.


In South Korea, SK Telecom (SKT) is planning to launch an
RCS-based service and deploy its Smart Push technology to compete with OTT


KaKao Talk, a mobile messaging service used by 37
million Koreans is becoming a threat to mobile operators as it has recently
launched mVOIP service.


In India, telcos can also introduce RCS-based service and
develop technologies similar to SK Telecom’s Smart Push technology, which could
help them in competing with OTT players.

Danish Khan

[email protected]