“In their current model, some traditional telecoms companies will not succeed,” says Roman Friedrich, Booz & Company analyst,
the Financial Times reports. But just what might mean is difficult to foresee at the moment.
Still, it is instructive that, increasingly, there is talk of the extent to which “telcos” compete with the likes of Google and Apple.
The European Union’s telecom regulator, for example, now is investigating whether Vodafone , France Telecom, Telecom Italia, Deutsche Telekom, and Telefonica, as well as to the telecom trade group GSMA, have violated anti-trust law by trying to create a mobile payments consortium and service.
Google has a major “mobile wallet” service under development, and most observers expect Apple to enter the business in some way, as well. Some mobile service providers want to create their own application stores to compete with iTunes, the App Store and Google Play, as well.
But there is growing sentiment that service providers in many ways need to decide how they want to respond to the over-the-top voice and messaging apps and they need to act on that decision before subscribers transfer their loyalty.
“Operators can either stand back and let the OTTs take the lead, becoming a pipeline for OTT services, or they can respond by building their own multi-device communication platform; adding VoIP calling to handsets and extending voice, video, messaging and file sharing services to tablets and PCs,” a
white paper by Metaswitch Networks argues, for example.
In principle, there are four ways service providers can respond to over-the-top applications: ignore them; block them; partner or launch their own apps. There are risks, to be sure. The first option might simply lead to increased irrelevance of the service providers own offerings. The second option is illegal, in many countries, on many networks.
The third option cedes the customer relationship. Only the fourth option allows a service provider to keep the primary end user relationship. There are issues, though. A common operator concern is fear of reduced usage, or cannibalization of current revenues.
That is simply an issue a service provider must weigh. Many would argue that consumers are going to find a way to reduce their minutes no matter what, so the risk of some cannibalization does exist. The countervailing argument is that preservation of the customer relationship also is at risk. Service providers have to weigh the value of keeping a relationship, versus risking some revenue cannibalization.
An operator owned solution also ensures the operator maintains ownership of the customers’ account and communication identity, Metaswitch Networks argues. Ideally, a service provider OTT experience also can leverage some assets, such as the ability to support VoIP on all handsets, support seamless circuit switched calls to Wi-Fi and unify experience on all devices, across networks.
Service providers also are in position to supply an easy-to-use experience, instead of the typically “fragmented” experience encountered when users have to use multiple, non-integrated apps and services.
Incremental revenue opportunities are important, as well. Metaswitch Networks believes its new “Accession” portfolio will enable new premium revenue services such as group video; video-mail; contact, photo and file sharing.
Advertising opportunities also should develop, including paid advertising such as banners in apps and mobile messaging ads.
Service providers also could benefit from additional “paid identities” such as local numbers in a variety of cities. Also, seamless communications across networks and devices should make easier the task of selling services to small and medium business accounts that increasingly rely on mobile services, but might find integrating mobile communications with fixed network services a daunting prospect.
Edited by
Jennifer Russell 
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