Feature Article

October 23, 2014

Carriers to Lose up to $14B on OTT Services

A new report by Juniper Research forecasts carriers to lose up to $14 billion revenue on over the top (OTT) apps in 2014.

That’s 26 percent more than last year. The firm found that in some markets, including Spain, Italy and the United Kingdom, carrier revenues had fallen to less than 60 percent of what they’d been five years ago. Not only are these carriers facing lower revenues, they’re also struggling to keep up with the traffic these services generate.

There’s an obvious conflict of interest at play. Carriers want their customers to keep using their devices and data plans, but the customers prefer the flexibility of VoIP and social media apps like Skype and Facebook rather than being tied to their devices.

There is actually some good news for carriers, as long as they’re willing to look elsewhere for revenue, targeting businesses rather than consumers with M2M and analytics.

"In areas such as M2M (machine to machine) and mobile money, operators can achieve a substantial revenue uplift by focusing on full service provision rather than simple connectivity,” Windsor Holden, the author of the report, “Mobile Operator Business Models: Challenges, Opportunities & Strategies 2014-2019.”

M2M and big data could offer revenues of up to $66 billion over the next five years, more than making up for any losses due to OTT services.

Other strategies include rolling out shared data plans or even bundling these services into subscriptions. For example, some carriers have given out a free year of the premium version of Evernote for new subscribers.

Another way to make money is to implement direct carrier billing, letting users pay for purchases using their phone bills instead of credit cards or cash.

To get a handle on the traffic, using Network Function Virtualization (NFV) technology looks like a good solution. It will let carriers use ordinary servers instead of proprietary switches and deliver new products to market faster.




Edited by Alisen Downey


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