Must Telcos Embrace Over the Top Partners?

Virtually every telco in the world sooner or later will have to deal with over the top competition, even if the immediate threats are seen in some "developed" markets, the simple reason being that broadband Internet access makes such competition technologically possible for the first time. 

“Operators need to be more realistic and recognize that the OTT community is a meaningful threat to revenues,” says Nicole McCormick, Ovum senior analyst 

“The erosion of messaging revenues is already a reality in markets such as China and South Korea, and this is a harbinger of similar changes elsewhere," says McCormick. "Operators need to re-evaluate their business models, and decide on the degree to which they should compete or collaborate with content providers and OTT players.”

That also means virtually every service provider sooner or later has to have a strategy about dealing with over the top competition. One common strategy is to essentially fight OTT competition by adding more value to legacy services, using a combination of packaging, pricing and features. 

The less taken path, at least so far, is to actively embrace OTT services. That might not be so rare in the future, though it might be more common for service providers to craft ways of structuring access plans, rather than sponsoring OTT apps directly. 

Some service providers might craft access plans that exempt use of some specific OTT apps from a user usage allocation, for example. Apple FaceTime usage might be one example, but others will try to do similar things with messaging or entertainment video, perhaps offering unlimited usage or generous usage in exchange for payment of a specific app fee.