An Important Lesson about "Over the Top" Danger

Contestants in competitive communications markets tend to recognize the value of having the leading incumbents set a high price umbrella, the simple reason being that a common attacker strategy is to offer "same service, less price." 


The higher the price umbrella, the better the value proposition an attacker can offer, and still generate more revenue than under a low price umbrella. 


That seems to be the case for over the top applications in the messaging space, in European markets that feature high tariffs. 


European operators rely on high tariffs for international calls and texts. Whatever else one might say about that situation, the high tariffs allow lots of room for attackers to offer the same features at much lower cost.


Over the top application providers provide salient examples.


By way of contrast, U.S. service providers, operating with a continental-sized domestic market,  offer unlimited or huge buckets of calls and texts for a flat rate that offer much less room for attackers to exploit.


The exception is international calling, where apps such as Skype get serious amounts of use. But for domestic calling, tariffs are so reasonable that there is little incentive to modify domestic calling or texting behavior because the marginal cost of a domestic text or call is zero. The "Panic" About OTT Apps


The point is that the pricing umbrella has significant implications for competitive dynamics. Over the top will be a bigger danger where the pricing umbrella is high, and much less a compelling alternative for users where the pricing umbrella is low.