Skip to main content

Outlook for Over-the-Top Mobile Communication Apps

There's been a growing concern about the impact of Over-the-Top (OTT) mobile communication software applications -- such as WhatsApp, LINE, WeChat and Skype -- on the Mobile Network Operator (MNO) business model. The negative threat is somewhat obvious, but there is also the potential for market collaboration and business partnerships.

While the majority of OTT communications providers concentrate on growing their community and exploring new business models, this market development also provides an opportunity for MNOs to play an integral role -- and thereby re-emerge as a positive force in the monetization process of OTT communications.

Findings from a new worldwide survey show MNOs are dramatically changing their strategy and plans to partner with the OTT players. The annual survey by Mobilesquared, revealed that by the end of 2014, 55 percent of MNOs have already formed or expect to form a relationship with an OTT partner compared to only 36 percent in 2013.

Most notable, the number of MNOs yet to identify any benefits from OTT partnerships plummeted from 36 to just 4 percent during the last twelve months. Clearly, they're moving beyond the prior denial of this advancing trend, and now embracing the apparent market disruption.

Eighty percent of MNOs currently cite their most pressing concern as declining revenue on traditional voice calls and P2P (Person-to-Person) messages, directly attributed to the increasing pressure of OTT services.

This year, 40 percent of mobile operators said that OTT services attributed to a decrease in revenues over the last 12 months with 33 percent of MNOs seeing up to a 10 percent revenue decline in the period.

With only 21 percent of respondents citing a similar impact in 2013, it is clear that the impact of OTTs on MNO revenues is growing. Mobilesquared forecasts that the global mobile network operator opportunity for OTT communication will be worth $42.9 billion in 2018.

"OTT communications has always been about growing a multi-million user base and market capitalization. But we’re now seeing the maturation of the OTT communications space and the need to monetize the user base. The quickest route to monetization for the majority of OTT communications providers will be to seek out partnerships with mobile operators to capitalize on their end-user relationship and billing functionality," said Nick Lane, chief insight analyst at Mobilesquared.

Survey results from previous years showed that imposing surcharges, charging for data or blocking access to OTT services are no longer seen as viable business models to help MNOs stand up to financial pressure from OTTs.

The number of MNOs offering their own messaging applications fell from 43 percent in 2013 to just 5 percent in 2014. A further 10 percent of MNOs blocked OTT services in 2012, but now this practice is not done at all.

Moreover, 71 percent MNOs believe an increase in customer loyalty is the predominant benefit of forming an OTT business partnership. Consequently, 45 percent of those surveyed saw opportunities to monetize OTT services through the inclusion of data as part of the standard data bundle.

While MNOs are now actively looking to build partnerships with OTTs, many still have questions surrounding the logistics and literal implementation. As an example, 64 percent of mobile operators said that business reasons were the primary motive for not forging a partnership with an OTT provider, followed by infrastructure complexities (26 percent) and regulatory issues (23 percent).

Not only are there challenges, according to Mobilesquared assessment, but mobile operators have also expressed their concerns of entering a collaborative model with an OTT provider. Almost one-third of mobile operators said that they would have no idea what the contractual agreements would look like.

Popular posts from this blog

Climate Change Benefits from The Circular Economy

The COP26 Summit (in Glasgow, Scotland)  brought parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. Meanwhile, the circular economy is a key sustainability strategy adopted by industry leaders in their efforts to achieve progress. While the circular economy is still in its infancy in terms of data and metrics, it's a growing phenomenon where technology sectors -- such as the Internet of Things (IoT) for asset tracking -- are set to grow rapidly within the next five years. Global technology intelligence firm ABI Research forecasts that the world will achieve over 10.5 percent circularity by 2030, as sustainability efforts and incoming legislation start to take effect. Circular Economy Tech Market Development "The circular economy is an often-misunderstood concept that goes much further than waste management and can become a blueprint for cities. It is a movement away from our take-make-waste economy

Guidance for Leading Digital Business Value Creation

In today's environment where business technology is a key enabler of competitive advantage, CEOs need to be sure that someone is confidently leading digital business growth across the organization. The default is the Chief Information Officer (CIO) role. According to the latest worldwide market study by Gartner, in order to accelerate business value creation, CIOs and other IT executives should focus on three key areas -- leading from anywhere, nurturing connections, and reaching beyond. Mbula Schoen, senior research director at Gartner , said that as organizations continue to emerge from the disruption of the COVID-19 pandemic, CIOs and IT executives will need to generate value in fundamentally new ways. Business Technology Market Development Gartner forecasts that by the end of 2022, the share of knowledge workers working remotely will increase to 47 percent -- that's up from 27 percent in 2019. However, simply moving from onsite to remote is not the destination but merely a

Business Technology for The Anywhere Workspace

The COVID-19 global pandemic fueled the trend of pushing executives outside of their comfort zone, while government-mandated lockdowns required their knowledge worker employees to work from home. Companies that previously avoided 'Flexible Working' models were forced to embrace the pervasive trend in a matter of weeks, as new remote working policies became a CHRO standard practice. As we enter 2022, more employers will empower their key employees to work wherever they desire and engage with customers whenever and however they prefer. Moreover, the ongoing transformation to an 'Anywhere Workspace' will drive strategic IT spending and advance cloud-based SaaS adoption. Business Technology Market Development Global enterprise IT spending is projected to total $4.5 trillion in 2022, an increase of 5.5 percent over 2021, according to the latest worldwide market study by Gartner. "Enterprises will increasingly build new technologies and software, rather than buy and imp