Tuesday, May 22, 2012

TU Me: Can Telefónica beat OTT players at their own game?

If you can’t beat them, join them. And then beat them. That seems to be what Telefónica is saying with the launch last week of an OTT voice and messaging app and service called TU Me. This cloud-based app allows users to text, call and share their photos and location information using their mobile data allowance. By doing so, it competes directly with OTT services such as Skype, Viber and WhatsApp.

TU Me, available now in an iOS version and soon to be launched for Android, is free of charge. Users need to have the app installed, so for now it cannot be used to make calls to PSTN phone numbers. But the service is available to non-Telefónica subscribers too, so it could easily spread far and wide. By Thursday, TU Me was reported to be the No.1 application in Spain for the Apple App Store, not bad for a beta service only available in English.

So why would an operator, one of the biggest, risk cannibalizing revenues with an OTT service? Such services have been widely blamed for billions in lost revenues for operators. And attempts to charge extra for access to OTT instant messaging apps have not proved popular, as mentioned on Fierce Wireless.

Probably the single greatest justification can be seen in one quote from Telefónica. It would rather “keep the customer than lose them to other products”.

Telecom analyst Dean Bubley, who has long predicted that more operators will shift into the OTT space, writes on his Disruptive Wireless blog that TU Me differs from many of the other OTT offerings out there.  “…apart from Skype and Google Voice, they're not run by companies with 300m+ existing users to whom they can evangelise (sic) and bundle.  Telefónica also ought to have some cost advantages, as it's got its own cloud platforms and back-office capabilities.”

And of course Telefónica was already addressing the OTT threat with its purchase of Jajah, something you can only presume has helped in its development of TU Me.

So how will Telefónica make money from a free service? Additional data revenues, maybe, although TU Me works over Wi-Fi too. Ingrid Lunden at Seeking Alpha says this:
The idea is to get as many people as possible using it, and then monetize it along the lines of how Skype has done - through the rollout of eventual value-added services. That could mean enhanced communications, but Telefónica tells me that it will likely also mean adding mobile advertising and other ways of generating revenue.
We will just have to wait and see how the service will do, how it will affect revenues and numbers for Telefónica and its competitors. At least no one can accuse TU Me of being a case of “me too”. 


  1. I love this line "If you can’t beat them, join them" i seen your a very competitive and that is good.Anyway i love your post.

  2. Thanks! There really is no other way, is there? Telecoms have to compete, both on their core strengths and by taking on the challengers ...

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