Digital Transformation

Digital Transformation

Why are OTTs so popular?

For 10 years, telecoms operators have been facing a new and unfair form of competition i.e. one with no stores, no bills and no investment in telecoms networks. This competition is called OTT (Over The Top) and is dominated by US and Chinese industry giants – GAFAM[1] and BATX[2].

OTTs have managed to capture a growing number of users to the detriment of operators. Messaging apps now account for 80% of all messaging traffic, and Skype alone has 30% of international voice traffic.

So, what is the recipe of their spectacular success?

Cost of use

One of the reasons often cited is that users are under the impression that these services are completely free. They do not pay for the actual service as they have already paid for the data. By subscribing to a data bundle or a specific subscription, they are free from all financial constraints. Therefore, they can make a large number of calls via WhatsApp and share videos, photos, posts and messages on Facebook messenger. In comparison, calls are billed by the second or minute in many countries and text messages are billed per unit.

 

User experience

The user experience is also an important use criterion. Facebook, WhatsApp, Viber and  Skype offer an agreeable interface with innovative features plus the ability to easily juggle calls, gifs, images, videos, messages and documents. On the other hand, text messages have not really changed in their almost 27 years of existence. Admittedly, the number of allowed characters has been extended and emojis have been added but the overall experience remains the same. In terms of the voice services offered by telecoms operators, the changes tend to concern the general roll-out of HD voice, although this improvement has not yet been perceived by users.

 

Sense of freedom

This has become a very important criterion for users. Initially, it was all about freedom from the operator. In a multi-SIM environment, I can easily switch operators. I can switch from one to the other without losing my conversations and history, I don’t like being stuck with a single operator. However, this is not necessarily true for WhatsApp and other voice OTTs, which link a user’s account to their SIM card while ‘pure-player’ messaging applications (e.g. Twitter, Facebook, Skype and Telegram) are not linked to a particular SIM card. Secondly, this notion of freedom has become increasingly significant in recent years with the launch of secure and even encrypted messaging making it difficult – if not impossible – to access messages by anybody or any organisation not among my recipients.

 

Cultural and generational factors

All OTT users have the same aspirations and behaviours. I use WhatsApp because my network of colleagues uses it; I use Facebook because all my friends are on it; I use Skype, WeChat and Viber because suppliers, customers and colleagues use them. I don’t want to feel left out. By using these OTT networks, I feel like I’m trendy. I’m an integral part of a movement and I’m connected to others all over the world.

 

A fragile relationship between OTTs and their users

Undeniably OTTs have a lot of functional advantages compared to operators and their services. However, let’s put this into perspective. It is important to remember that an OTT service is a downloadable app that can be deleted in a simple click. When it comes to operators, there is a SIM card, a plan (or pay-as-you-go) along with KYC[3] considerations. The link which ties a user to an operator is even stronger in a multi-SIM context.

 

Conversely, the fragility of the relationship between users and OTTs is growing. Between 2017 and 2018, almost 26%[4] of US Facebook users deleted their accounts following repeated scandals. The majority of the accounts were deleted between 18 and 24 March following the use of Facebook data by Cambridge Analytica. On the same date, Google also saw a rise in searches for “how to delete my Facebook account”.

 

Despite the usefulness, the seemingly ‘free’ nature and ‘trendy’ factor, lack of data security, leaking of personal data or abusive commercial use of this data can have immediate consequences on OTTs. All these factors only highlight telecom operators’ ethics, reliability and security.

 

[1] GAFAM: Google, Amazon, Facebook, Apple, Microsoft

[2] BATX: Baidu, Alibaba, Tencent, Xiaomi

[3] KYC: Know Your Customer

[4] Source: business insider

by Madjid BABACI the 09/11/2018

Article posted by :

Madjid BABACI

Consultant Senior

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