Thursday, April 5, 2012

Meeting the OTT threat

The threat to operators from OTT players like, for example, Skype and Viber, is two-fold: they cut into operators’ voice-generated revenues and hog bandwidth in the networks.

A large number of operators have opted not to do anything to meet this threat – or at least they don’t actively fight it, and allow the traffic through their networks. Others have been more active in developing reactive strategies.

There are several examples of operators collaborating with OTT players. A fairly standard approach is to offer your subscribers access to OTT services like Skype – as, for example, 3UK does. Another example is Sprint, which offers its customers Google Voice.

Another way of dealing with OTT players is to become one yourself. Telefónica provides an example: In 2009 it bought Jajah, a competitor to Skype, and thus became a player in the OTT market.

There are also some operators that are looking at charging their customers for VoIP services – for example, TeliaSonera. At this year’s MWC, their VP of Service development, Tommy Ljunggren, said:  “If you want to use those services on our network, you have to pay; if you don’t, those services won’t work”. Similar messages have caused some stirrings in the operator’s Swedish home market. Håkan Dahlström, Head of Business Unit Mobility Services, said in Swedish daily Dagens Nyheter (article in Swedish) “There is a perception today that everything IP-based should be free. But we are going to charge for mobile voice calls, even if they are VoIP”. And through its Spanish subsidiary Yoigo, TeliaSonera is already charging for premium VoIP services.

But there is a dual drawback to charging customers: As Royal KPN in the Netherlands discovered, consumers may react strongly and that can lead to discussions about net neutrality and even legislation that operators do not like. Secondly, and more importantly, customers may take their business elsewhere – because there is almost always a competitor or two ready to offer unlimited data use, flat fees and so on. 

The operators that are not doing anything yet might be developing other strategies. Or they may be waiting to find out if there is a winning strategy for dealing with OTT players. Perhaps that winning strategy is a combination of collaboration and competition – we might call it “coopetition”.

What do you think?


  1. Don't charge the consumers. Offer something that the OTT providers are willing to pay for and charge them instead...

  2. TeliaSonera just announced an important move related to this post. According to TeleGeography, the company will "compete with third-party, over-the-top (OTT) communications applications such as WhatsApp and Skype, by developing a Rich Communication Suite (RCS) type service."

    This is smart. It remains to be seen if their OTT strategy will work, but if it is going to work, implementing their own solutions is key.