Innovation & Strategies
Telecoms vs. OTTs: the time to fight back is upon us
Given the advantages and multiple features offered by OTTs (see article entitled “Why are OTTs so popular?), all operators are at risk and none are safe in relation to this pressure. However, there are several ways to limit the impact of OTTs.
Let’s take a look at responses that use legal and marketing strategies, as well as technical innovations. All these solutions aim at increasing protection, slowing down losses and improving diversification by generating new high value-added income streams.
Increasing regulatory and tax pressure on OTTs is key. This can be done at the local, regional and international level via governments, regulators and by putting pressure on the players (via GSMSA, ITU, etc.). This kind of pressure would force OTTs to change their business model thus reducing their attractiveness.
Improving international communication costs
International traffic is under a lot of threat as it is expensive, although some of this traffic could be recuperated. Communicating internationally using a free OTT means that my correspondent’s OTT application must be switched on, be in credit, have good network coverage, and communicate with an compatible device. The user experience is not ideal and leaves no room for urgency.
In this case, the operator’s services will be favoured over those of the OTT. Two areas will complement each other:
- The quality of the network and voice compared to voice over IP. It is important to make users understand this.
- Great plans e.g. operators can offer bundles including texts, and mobile and landline calls to certain destinations.
Improving roaming communication costs
Roaming is subject to fierce competition not only from OTTs but also from local SIM cards. These communications are highly exposed as they are more expensive. In addition to pricing concerns, roaming is complex and unpredictable. We have seen that companies do not hesitate to ask their employees to use OTTs.
Operators could also work on preferences such as:
- creating a bundle for one or more given countries to support outgoing roaming
- developing visitor offers by partnering with an overseas operator to support incoming roaming
- join regional roaming agreements to increase traffic e.g. One Area Network, Euro Zone, etc.
- for multinational operators, developing multi-country roaming offers
Improving domestic communication costs
Generally speaking, domestic traffic is less under threat as the price is less a factor and the network is more efficient. However, the attractiveness of OTTs in terms of domestic use is due to their improved messaging features. In just one click, the user can switch from messaging to calling for free.
User preference will be driven by a perception of better value for money i.e. in favour of the operator:
- creating large volume packages especially for text messages notably targeting students
- creating a prepaid OTT bundle with a special tariff (e.g. a WhatsApp pass, Facebook pass, etc.)
- promoting the sending of mass text messages to small businesses
Creating new opportunities
Given the threat of OTTs, operators must defend themselves but also predict and create new growth drivers. Thanks to their proximity with mobile users, operators must enhance the user experience, as well as maintaining regular and proactive contact. They must continue to invest in networks and be part of the innovation ecosystem.
Income streams will be generated by operators’ ability to monetise their assets e.g.
- data (anonymised)
- their infrastructures by creating APIs such as click-to-call and text messages, which facilitate the life of developers
However, all these solutions will probably not completely stop OTTs but a judicious combination of several of these solutions will help limit their impact and identify new sources of income. To find that right combination and one that improves sales rather than aggravating them, it will be necessary to proceed methodically. We will discuss this point in the next article.
Innovation & Strategies