Wednesday, September 12, 2012

Welcome to the speedup: VoLTE, Joyn and Tu Me push back against rising OTT players

We’re back from our summer break here at the Voice on Telecom.  And though we were gone for only two months, it seems that all the trends we’ve been examining since last October are now on fast forward.

On one hand, voice and SMS are under ever-increasing price pressure, at least in places like the US and Europe. (Though let’s not forget that huge swathes of the developing world are just getting connected now, and most operators in all markets will see huge voice and SMS revenues for decades to come).  The clearest example is in the US, where AT&T has just come out with its shared data plans (Verizon did the same earlier in the year). This sparked a net neutrality debate, as AT&T will only allow FaceTime cellular access on the new iPhone to “share plan” customers.

What caused no fuss at all in the media was the fact that both the Verizon and AT&T plans include unlimited voice and SMS.  At the same time, WhatsApp, the OTT messaging company, now sends or receives more than 10 billion messages a day, just months after it hit 1 billion messages. According to a report from mobileSquared, OTT services are affecting traffic for almost three-quarters of operators, link to the whitepaper a big jump from 2011.

But there is lots of good news too.  MetroPCS in the US has launched Voice over LTE, as have two operators in South Korea, SK Telecom and LGU+. This has real potential to kick start video calling and allow developers to expand voice offerings as the VoLTE community expands, and perhaps in the long runs as possible frustration over FaceTime and other OTT video services grows. In Korea, the two operators are branding VoLTE differently but also offering a wider range of VoLTE services, like HD Voice. Both companies also promised to unveil more VoLTE-capable smartphones as the year goes on.

The GSMA-led Joyn initiative also gained momentum with its recent launch by Vodafone in Germany. With Joyn – a suite of features such as instant messaging and video calling based on IMS – up and running in Spain and Germany, there is now a real opportunity for operators to prove its value in competition against the OTT competition.

In its report, mobileSquared says that RCS has real potential as a long-term answer. But it will take time to get enough people in the Joyn community – both through operator interoperability and the widespread rollout of Joyn-enabled handsets.

So what can help bridge the gap? Maybe Telco-OTT efforts like Telefónica’s Tu Me. When we wrote about this pure OTT play, it quickly became our most-read post ever. And as of August, the service had 600,000 users, with growing bases in India and the US, where Telefónica is not present.
Plus, Telefónica only recently started marketing Tu Me with this slick 60-second ad and a revamped Facebook page with more than 131,000 “likes.”

Telefónica Digital head Matthew Key said in July that TuMe served several purposes, from retaining customers leaving for OTT services to attracting users in places like the US. The group has also signed deals with Facebook, Google, Microsoft and Research in Motion to enable direct-to-bill payments, something we said last December that operators should consider.

In short, we are seeing disruption in real time. And while this is often scary to incumbents, we want to keep repeating our core message: there is real opportunity here for operators. But they need to act now before the window closes.