Well, since I don’t blog about movies, in this case I am referring to some obtuse telecom parlance that’s fairly interesting to write about.
Very simply put, its lingo that’s used to describe applications that use the underlying data layer provided by the MNOs. Better still, think Skype, Tango, Viber, Whatsapp, textPlus, LINE, Nimbuzz, KakaoTalk, Kik Messenger, Zlango, HeyWire, chompSMS….the list goes on – all of these apps use the underlying data layer to facilitate communications.
Now, wait a minute! What’s the big deal? There are umpteen apps out there that help you consume that precious bandwidth. Surely, these apps don’t merit their own parlance.
Well, in the minds of some, yes, they do.
And that’s because of what is called also called skimming. Meaning, that these apps, like I said before, facilitate communication of sorts. But the teleco’s are the ones in the communication business and are seemingly entitled to make money when that handset is used especially to communicate. The likes of Skype, Tango, Viber etc, are essentially OTT (or Over The Top) operators that are essentially stealing the teleco lunch.
Worldwide, MNOs have made a lot of money with SMS or texting as it is otherwise also known. The SMS market worldwide was worth around $115B in 2011. And it is projected to break the $150B barrier by 2015. And that’s a lot of money on the table. Worldwide in 2011, SMS traffic reached a staggering total of 7.8 trillion messages. Barring the North American market, every market is projected to grow for the next few years and by 2015, approximately 10 trillion texts could be exchanged annually.
MNO’s either bundled texting with Voice and data plans or in many cases (developing nations), sold SMS services separately. Apart from being a nice revenue generator for MNO’s, SMS is a great margin generator for MNO’s. And then comes along a service like Whatsapp – basically a messenger service much like IMs that we have gotten used to in the PC world. For the MNOs, the OTTs are a direct threat to their revenue and more importantly their profit streams. that use the data plan to add the data layer. In the internet world, VoIP was not such a big deal as it did not really impact cash flow for the network operators. It did cause a bunch of band-width issues and pushed utilizations levels – but that was ok. Mobile VoIP on the other hand is a different ball game. Telecoms fear, and for good reason, that their revenues will be cannibalized.
One way around it is for telecom operators to jump into the fray and offer these services themselves. Spanish operator Telefonica considered this to be a threat enough, and recently unveiled its offering – “TU Me”. It’s an app that offers ‘free’ calls, messaging, sharing capabilities on any network . This OTT issue forced the hand of the Dutch to recently make ‘Net-Neutrality’ a law in their land. The law as a result of the huge outcry when Dutch operator KPN began charging extra for m-VoIP services.
I personally think that m-VoIP can help the networks in that it will increase ARPU (Average Revenue Per User) due to increased data consumption. Also, I don’t think m-VoIP (OTT) is the death knell for SMS. SMS and m-VoIP based services will co-exist. The pen-rate of the smartphone is around 25% worldwide and not every smartphone user is using m-VoIP. And that picture is not going to change in the next few years. Furthermore, more people are familiar with SMS(texting) and the m-VoIP apps will have their hands full in trying to wean folks off of SMS. And lastly, there are many SMS based services (short-code communication, financial transactions – think M-Pesa etc) that are deeply ingrained in our mobile-psyche.
So, OTT is really not so ‘Over The Top’. I know that teleco’s are watching this trend closely with their fingers on the trigger to launch a competing m-VoIP service like that of TU Me.
What do you think? Will OTT and SMS co-exist or will one snuff out the other?