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Mobile dinosaurs can gain (not just lose) from Over the Top rebellion

Cash on table, but networks hedge bets with VoIP rivals

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As more people bypass their mobile operators to make voice calls and send messages, a new survey attempts to measure the potential losses and opportunities for WhatsApp, Skype and other so-called "Over the Top"* players.

The poll by analyst outfit Mobile Squared grilled operators and smartphone users in 68 markets worldwide, and calculated usage patterns against the revenue model in each market. Operators can both lose and gain from these.

Although users with smartphones can hop out of their network's walled garden with ease, which means lower revenue for the network in the long run, the operator can still gain incremental revenue from partnering with an "Over the Top" (OTT) service**.

This is because OTT services that offer VoIP (voice-over-the-internet) calls must pay a termination rate - a charge levied when routing conversations to a phone network. This fee may be shared with the mobile operator. So it can be a symbiotic relationship: a case of the parasite helping to keeping the shark's teeth clean, if you like.

For networks the "threat" perception has certainly increased. Most operators surveyed in the report (titled OTT: How operators can overcome the Fragmentation of Communication), 79 per cent think there's a revenue threat from OTT services - last year 13.5 per cent thought OTT services posed a threat to voice, now almost a third do. Almost half the operators expect to see a significant number - 40 per cent - using OTT services in four years.

Mobile giants have several options. They can partner with a well known OTT brand such as Skype, launch their own branded service (as with T-Mobile USA has done with Bobsled) or become part of the GSMA-blessed OTT initiative RCS-e. Most are hedging their bets, the survey shows. Half back some kind of RCSe-based service, but more than a third are rolling their own non-RCSe service, and almost a third are partnering. Others are simply charging for the data used to make the voice call over the internet.

But there's a not insubstantial bit of cash to be gained. The research reckons the OTT market will be worth as much as $166.5bn by 2016, with $30bn pocketed as profit.

The survey was underwritten by OTT gateway company Tyntec, which isn't exactly neutral: it favours a market where OTT providers share the revenue with the network operator. But such an approach offers the prospect of a much more diverse app marketplace than the committee-run, top-down walled garden of RCSe. ®

Bootnote

* OTT, for those who don't know, is any service delivered directly from provider to end user using an open broadband/internet connection – dodging the user's ISP and without any investment in infrastructure needed by the OTT provider.

** We looked at this in depth earlier this year: start here with Silicon Valley's assault on Mobile's Gated Kingdom.

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