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August 14, 2013

Mobile Messaging Turmoil: Report says OTT Pose Multi-billion Dollar and joyn is Not Solution

UK-based research house mobileSQUARED, in conjunction with vendor tyntec (which facilitates telephony in the cloud for OTT services), is out with the results of a new survey that has the mobile messaging community abuzz. The sub headline revealing the survey results says it all:

“OTT services offer mobile operators $30 billion potential revenue opportunity but threaten voice and messaging by $182 billion in 2012-2016 period.”

 In a word, “WOW!”

The facts about OTT and lack of support for GSMA’s messaging service joyn says it all

Based on responses from mobile operators in 68 territories, the research: 

  • Found that the shift of consumers from traditional voice and text towards app-based free and low-cost services will cost operators an average of $30 billion per year.
  • Forecasts that the OTT market will be worth as much as $166.5 billion by 2016, with as many as 18 percent of subscribers using OTT services by 2016, up from just 2 percent now.

At least this threat from OTT services is not a surprise to mobile operators. The survey found that:

  • 79 percent of respondents understand that their voice and SMS revenues are under assault.
  • 53 percent believed that OTT will cause voice and SMS traffic to decline by more than 20 percent over the next five to 10 years.

More to the point, research firm Informa recently presented data that says daily OTT messaging traffic overtook daily peer-to-peer SMS traffic in terms of volume last year.

WhatsApp, Facebook and Google are seen as the biggest problems, although, surprisingly, Apple’s capabilities including Facetime were not mentioned.

What was mentioned -- which is not good news for the messaging service being offered by the operators GSMA association (which represents the interests of mobile operators in 220 countries and unites the nearly 800 operators with more than 230 companies in the broader mobile ecosystem) -- is that their answer to the threat, joyn, is not seen as a solution.

Source: joyn

Indeed, 36 percent are uncertain of the impact joyn will have on their ability to tackle OTT players, while 29 percent believe joyn is definitively not the solution. A further 29 percent said it had the potential to be the solution, but it has taken too long to launch.

Note: Just as aside, check out the joyn video gallery. It makes what seems like a good case for downloading the app.

“Because joyn is looking less favorable, many mobile operators are now looking into alternative OTT strategies and have moved away from blocking or imposing surcharges or lowering the quality of the service,” commented José Garcia, vice president of Sales & Carrier Relations for tyntec. He continued noting that, “Instead of creating their own OTT solution, they are now looking into new opportunities by expanding their A2P SMS offering or partnering with OTT providers. Both options allow them to participate in the success of OTT services and open up new revenue streams.”

It was also noteworthy that the number of mobile operators partnering with OTT providers rose from 32 percent in 2012 to 36 percent this year.

Operators have opportunities

The last item is a good segue into another finding of the researchers. The authors state that OTT services are creating a f”ragmentation of communication,” as “multiple different non-interoperable communications services are creating ‘walled gardens’ of communication for consumers.” Their take is that this means incumbents have the opportunity to break down the walls of these gardens to create a truly interoperable and converged OTT-mobile communications experience for consumers. Leaving as an open question, “Will they compete or cooperate?”

The answer to that question is problematic. The survey does provide some context:

  • 16 percent of operators currently believe that they will generate incremental revenue from OTT.
  • 66 percent believe that they will make money from OTT but only at the expense of traditional revenues. This is despite a significant growth in paid-for OTT usage over the coming years.
  • The research predicts that 534.9 million users will use paid-for messaging services in 2016 (compared to 118.9 million now) and that 434.7 million users will make “off-net” OTT-mobile calls (compared to 68.6 million now).

The research also quantifies the potential opportunities for operators in the OTT market, which is set to reach 1.32 billion users by 2016.

They note that a range of strategies could help operators benefit OTT growth. These include: charging users additional fees for using OTT,   and creating their own apps or deploying RCSe/joyn-based initiatives. Their primary suggestion was to observe that: “The key opportunity for operators is to partner with OTT providers to integrate mobile numbers into their services.  In this way, OTT services can be made cross-platform compatible, letting them make and receive calls to and from any phone or service, whether or not it is OTT enabled.  Partnering with OTT providers in this way has the potential to generate almost $30 billion worth of revenue over the 2012-16 period.”

Thorsten Trapp, CTO, tyntec, said, “OTT is here to stay and this research graphically demonstrates the scale of its impact on the traditional mobile telecoms market. That it will bring about a decline in voice and text revenues is well recognized, but what’s less well understood is how Operators are in the ideal position to be the facilitators of paid-for ‘off net’ communications.”

Nick Lane, Chief Strategy Analyst, mobileSQUARED, said, “The OTT market is growing fast but it’s still in its infancy. The current market structure is seeing the rise of multiple communications walled gardens which aren’t offering consumers a truly converged service. If operators want to maximize the potential upside of OTT, whilst minimising the downside, then they need to stop burying their heads in the sand and look at how they can collaborate most effectively with the OTT industry.”

Looking back over the history of communications, whether it be basic telephony, facsimile, e-mail, SMS, etc., the saying that “all boats rise when the tide comes in” is the point here. The researchers are correct in recommending that some form of collaboration/cooperation is the path for mobile operator relevance and profitability. Going it alone is not an answer and apparently operator confidence in joyn is not either. How fast the mobile operators act is now key. However, how they choose to do so remains up in the air. What we do know is the window of opportunity is ajar but is going to close very quickly.

Edited by Rich Steeves

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