US telecom operators are better prepared to deal with OTT services than European firms

Telecom Lead America: US operators are better prepared to
effectively deal with and profit from OTT services compared to European


Despite the $30 billion revenue opportunity from OTT
messaging services, European mobile operators have been slower than the US in
preparing for the rise in demand.


Nearly 25 percent of European operators have already
experienced up to 5 percent loss in revenue, and almost 75 percent anticipate
additional losses over the next three years, peaking at 11-15 percent.


US operators have yet to experience losses on operator
messaging services or revenue because of OTT, according to a study released by
tyntec, a German-based mobile interaction specialist, in association with UK
analyst firm, mobileSQUARED


The report uses the launch of T-Mobile’s Bobsled OTT
service as an example of successful US adoption.


Since launching in 2011, Bobsled has attracted over 1
million users globally — of which 95 percent were not T-Mobile subscribers.


Operators in other areas of the world are working to
prevent adoption by blocking OTT services, a practice that doubled from 5.4
percent in 2011 to 10.5 percent in 2012.


Despite Bobsled and the proliferation of other OTT
services in the US, operators expect a split between 11-20 percent and 31-40
percent of their subscriber base will be using OTT by 2016, while almost 50
percent of European operators expect a higher adoption rate of 40 percent. This
can be explained in part because of flat rate SMS and voice plans in the US,
thus the cost savings aren’t as compelling as Europe.


By 2016, operators around the globe expect that over 11
percent of their customer base will be using OTT services,


OTT services are expected to reach 45 percent of
smartphone users in the next four years.


The total number of OTT users on smartphones is expected
to more than quadruple from 276.8 million in 2012 to 1.32 billion in 2016.


79 percent of European operators believe that OTT clients
on smartphones are a threat to traditional SMS- and voice-based services.


Every operator included in the research believes voice
and SMS traffic will decline over the next 5-10 years.


SMS continues to be the standout concern for operators.
In 2011, 67.6 percent of operators identified messaging as the most challenged
service by OTT, but that figure has increased to 73.7 percent in 2012

The incremental revenues generated from OTT
interconnectivity is expected to reduce the annualized decline in voice and
messaging revenues (US$30 billion) by over 25 percent.


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