How mobile operators can profit from OTT
Pinger’s TextFree is hugely popular with US teens, running on iPhone, iPad, iPod Touch and Android gear: its users sent 2 billion messages in January, the company says, and it reached profitability two years ago.
Pinger offers its users a real-world telephone number and they can call anybody in the world.
“The only way to bridge the web with the telephony world is with a real number,” reckons Tyntec’s Giovanni Benini. This has been allocated out of a pool reserved by Tyntec.
It all works thanks to the way termination fees are handled. Tyntec terminates all the calls, and so long as Pinger users receive as many calls from the "network" as they make outside the network, the inbound and outbound termination fees are balanced. A counter on the Pinger app tells the user whether they’re in balance.
Tyntec’s part in this is providing the numbers it has obtained from a huge international pool, but more importantly, because it terminates the calls, divvying up those termination fees. Pinger, which was co-founded by top Palm and Handspring exec Joe Sipher – a voice of common sense in the Valley when I reported from there - also makes money from advertising.
I saw a number of services using Tyntec’s tt.one gateway – which is what it calls the servers that sit in a telco, doing the transcoding and translating between the GSM world and the OTT players. One is online dating, providing anonymous communication. Another is customer engagement marketing, again, providing an ad hoc disposable number that can be called or texted.
And if a small startup Pinger can become the face of mobile – why can’t Facebook? Facebook already has more users than any mobile network, and some people already spend more time inside Facebook than they do watching TV. The signs are that it’s already experimenting with telephony; at Barcelona it’s announced billing relationships with the world’s largest carriers.
And that would have seismic effects on a telco industry anxious about cannibalisation and fretting about data.
Martin Geddes, who founded Telco 2.0 consultancy and has worked at BT and Sprint, lays out the telco’s troubles in a stirring and brutal diagnosis called Peak Telco.
“The traditional vendors are dying. Their multi-year cycle times are hopelessly mismatched to the environment. In their place, a raft of 'internet-time' startups are taking their place, filling in the missing features that decades of neglect of the voice and messaging business have left behind,” writes Geddes.
“You mean I still can’t record and search my calls in 2012? Wow!”
Disruptive Analysis’ Dean Bubley has been writing about the OTTs for as long as anyone, and is bullish about their chances of success. He said: “RCSe was last year’s initiative by GSMA and RCS was four years ago. What we’re really talking about is coalitions of the losers.
“All it takes is one operator to break ranks – like Free Mobile has done in France. One operator has to say, you know what? We’re actually more accountable to our shareholders than the GSMA.”
But there are quite a few pratfalls and potholes standing between the OTTs and industry leadership. Some of these could be fatal. In the next part, I’ll look at a few. ®
More cultural issues
To cap off the cultural problems with telcos;
There is no real competition in the telco world, just like petrol stations, banks and every other mature market they all know that reducing prices only benefits customers, not vendors. The telcos have armies of people who went to school, served with or otherwise know key government personnel and regulators to make sure no nasty surprises come from that direction (thus the true scale of Ms Reding's achievements). The telcos also work very hard to ensure that their pricing cannot be usefully compared to any "competitor" pricing by ensuring the plans are sufficiently different. This leads to a poorly informed customer base which produces the inefficient market they need and keeps the customers as the prey.
Combine this culture of ensuring that all changes are slow and gradual so that the big players going in are still the big players afterwards (this is what industry standards bodies are really for) and the tacit agreement that you can compete on everything but reduced price or margin and you get the modern telco market. The companies who control the networks have such vast sums of money locked up in them that they make real estate investors look high-risk.
What is asked for if the telcos are to survive this at all is for one or more of the players who own the infrastructure to change the entire culture of their organisation and even so, they'll still be too big to innovate at the speed of the small players. They'll try to do what the banks do and be parasitic in the payment stream but Apple has already demonstrated they can be bypassed for this. They'll also try to prevent really disruptive services from using "their" network but this will be a managed retreat from regulators. It will be a bumpy and unpleasant road with many pitfalls (for the customers and shareholders) but I really don't see a Telco making big enough changes to do anything other than slow the inevitable.
I think the proper term is "Mobile Dungeon". The telecom operators have made screwing over their customers an operating principle.
You have a "plain" plan and want to do some websurfing ? Yes Sir, will cost 20 cent PER 10000 BYTES. Never mind the typical news site has now 1 MB size.
You want to send 160 characters to another phone ? That will cost you 10 cent at least.
You want to call a phone number which collects 4cents/minute from fixed line ? Sir, we will hose you 50 cent per minute from your mobile then.
The mobile telecom industry is full of idiots who would be unable to sell Moevenpick icecream during the hottest days on a full-of-people Mallorca beach. Sir, one nut costs 20 cents, so the total ice cream cone will cost you 1000*0,2 == 200 Euros. We only accept American Express, I am afraid. No cash please.
Re: Re: Data only
The internet is taking over everything. I dont have a sky subscription anymore. With 4od and iplayer and other online streaming services i can get all the tv that i want. I hardly make voice calls on my phone. Skype seems to work better for me. I use whatsapp for text. All i want is data. And i would bet there are lot more people out there like me. Its going to be a long strugle for mobile companies and cable companies.