RIO DE JANEIRO – Wireless carriers are losing revenue to over-the-top (OTT) players that offer competing services for free over the carriers’ own networks, such as text messaging and voice. To deal with this threat, operators must decide to sit out the fight, compete head-to-head, neutralize, partner, or emulate OTT services, an industry observer says.
“We have noticed that all five are being adopted, mostly those which are reactive,” said Marceli Passoni, research analyst for Latin America at Informa Telecoms & Media. If carriers want to remain competitive, they have to provide services as good or better than the services OTT players offer, she said.
“OTT players are eroding carriers’ revenue and have changed the way carrier act,” noted Samsung Eletrocnics’s senior manager Marcio Rogerio Herman, separately.
Customers today adopt OTT applications because they are free, but Passoni suggested that quality will increasingly become a factor driving consumer demand. Carriers could boost both their profits and that of OTT players by forming partnerships, according to Passoni. This would signal a new phase of evolution in the telecommunications sector, she said.
Passoni began a presentation at Informa’s LTE Latin America event this week in Rio de Janeiro by noting that consumers wanted to be liberated from places in the 1990’s, from devices in the 2000’s, and, now, from being locked into price plans. Eventually, consumers will want to be free from having to choose certain operators.
There is an ongoing transformation from consumer preference for free apps (“freemium”), which arose the advent of smartphones, to non-operator communications, Passoni said. “Currently, text message and voice are under alert,” she said. “Networks and APIs are even more open, in consequence there are many new applications and some of them replace mobile telephony.”
Indeed, apps are changing the market’s structure. Passoni shared Informa research that shows about 50 percent of carriers surveyed said apps are already siphoning some services away, mostly short message service (SMS).