Telcos Need an Over-The-Top Game Plan: What's Your Move?

The fast adoption of new OTT services has a double impact on mobile network operators

Over-the-top (OTT) players that offer innovative services are gaining ground. These players are constantly growing and adding more and more subscribers into their databases.
Telecommunication companies have seen the impact that OTT services have on their networks and services. Along the years, less people using text-messaging services available via mobile network operators to communicate; instead OTT messaging players, such as WhatsApp, Skype and Viber (among many others), are replacing them.
But text messaging is not the only service affected by the rise of OTT players. At first OTT players started with the idea to provide instant messaging services, and they have now evolved into providing voice-calling capabilities. The fast adoption of these new OTT services has a double impact on mobile network operators:

• First, the actual services deployed for SMS and voice calls have experienced a negative trend in terms of usage according to the report "Mobile Messaging Futures 2014-2018" presented by Portio Research Ltd.

• Second, the extra data traffic created by OTT players has increased exponentially in the last years. This effect translates directly to congestion problems in the network.

Now network operators not only have to cope with the competition generated by similar services, but they also have to cope with the internal competition generated by OTT services. In many cases, these services are hogging some of the most important revenue sources, such as international voice and messaging.
Network operators are in a very complex situation, due to the actual tariff models that most of them have. They have adopted flat rate data plans, which are benefiting the OTT players that use network operators as commodity suppliers in order to deliver their content. This causing some network operators to change their current strategies and find different models to compete or coexist with OTT players.
There are different approaches that network operators have adopted in the past that they can use again now:

• Defensive strategy: Essentially network operators are offering advanced and new services to high-end customers especially where OTT players are active. This is a clear example of a customer analytics use case (usage, behavior, location and more). By understanding the behavior of high-end customers in the network it is possible to come up with attractive alternatives for them.

• Attack strategy: As a first reaction some network operators decided to block the OTT players that offer the same services as them, especially the ones that are suffering from decreased revenue, such as voice and messaging.

• Cooperative strategy: Some network operators decided to join forces with OTT players in order to provide services and solutions. In some cases this strategy is performed in a collaborative way and in exceptional cases the network operators decided to acquire the OTT service. In the past few months it is possible to find some OTT – Telco partnerships announcements. As an example, Airlet Nigeria and WhatsApp created an exclusive WhatsApp-branded mobile data plan to compensate SMS revenue loss and increase brand perception. This formula seams to have good results because it was replicated in other Airtel markets and now it includes more OTT players.

It is clear that telecommunication companies have to find ways to compete against or work with the OTT players, and now is the time to find new revenue streams. However, there isn't an opportunity to improve what is not measured, and regardless of the strategy that Telcos follow, the first step is to measure and understand their customers. Telcos have a lot of information about their customers and it is time to make use of that data to understand how customers are making use of the services. Having this information will allow Telcos to make better decisions about improving an existing service, creating a new one or partnering with an external one. Without a doubt, big data is the first step that network operators need to adopt in order to continue in the data-driven decision era.

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