High time to face up to OTT competition

David Ashby
Metaswitch
The proliferation of smartphones and the upsurge of mobile broadband have undoubtedly paved the way for OTT (over-the-top) apps to aggressively compete with mobile operators for consumer loyalty. Couple this with the fact that the Asia-Pacific region is ahead of the world’s most advanced economies in terms of mobile phone penetration, and OTT could become the dominant technology in the region.
 
According to app analytics firm Distimo, Asia boasts the second-largest global app market — China — and it has a fast riser in South Korea which is now outpacing many European countries. Asian countries like India and Thailand have grown 27% and 40%, respectively, since December 2010.
 
OTT apps are starting to take their toll as they catch consumer interest and cut into voice and messaging revenues, particularly as demand from data-hungry users increases. There are two types of OTT apps at play – those that are installed aftermarket like Skype, Viber and WhatsApp, and those that are offered by operating system manufacturers like iMessage and Google Talk. The latter have the advantage of being pre-installed on mobile devices.
 
Additional pressures from competitive carriers with Wi-Fi or new 4G LTE capabilities are also causing the competition to heat up, with many operators expecting competition from OTT apps to eat significantly into voice and messaging traffic and revenue over the next five to 10 years. With this in mind, operators need to quickly decide how they are going to respond to the evolving mobile telephony landscape in Asia and act before OTTs and competition lure away subscribers.
 
Asian network operators have a choice. They can either stand back and let OTTs take the lead, becoming a pipeline for OTT services, or they can respond by building their own multi-device communication platforms -- adding VoIP calling to handsets and extending voice, video, messaging and file sharing services for PCs and tablets. By ignoring or blocking the threat of VoIP traffic and OTTs, operators will no doubt lose subscribers to more aggressive counterparts. Partnering with an OTT app developer is another option but also comes with significant risks, such as giving up ownership of the customer’s mobile identity and delivering poor service levels.
 
As OTTs continue to gain traction and key players become more entrenched in the field, operators need to act now and build a solid solution, otherwise they run the risk of being left behind. The window of opportunity is limited for operators to launch their own solutions and build the experience their customers are seeking. They cannot afford to wait for IMS, RCS, VoLTE, IR.94 or MMTel supplementary services as it would be too late by then.
 

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