OTT Messaging Represents 4% of Total Messaging Revenue

Over the top messaging apps are perhaps an apt metaphor for the ways the Internet has reshaped the communications business, most of us would likely agree. At various points in the recent past, there has been debate about whether the next generation telecom network would be the Internet.

That isn't true, precisely. There are private IP networks as there is a public Internet. There are Internet apps and carrier services. But to a degree that is discomforting, much of what people want to do these days can be done using the Internet, rather than any carrier-provided service.

Over the top messaging illustrates those changes as well as anything. But the OTT impact is not so much that it cannibalizes carrier messaging revenue. In fact, OTT probably represents something on the order of four percent of messaging revenues.

As often is the case, OTT does not so much replace existing revenue as destroy the business. Skype, for example, earns a modest amount of money in global telecom terms. But that is not what Skype represents. 

Instead of shifting revenue from one provider to another, Skype mostly kills the carrier voice business. Executives in the video entertainment business encapsulate that insight by talking by "trading analog dollars for digital dimes."

That pretty much gets it right. Internet alternatives only partly "take market share and revenue." Mostly, they destroy existing markets. T