OTT Threat: Top Strategies To Fight Smart
SAP Mobile Services, Operator Guide 2013
Pamela Clark-Dickson, Senior Analyst, I...
OTT Threat: Top Strategies To Fight Smart
The rise of Over-the-Top providers (OTTs) of mobile VoIP (mVoIP)
and IP-based me...
OTT Threat: Top Strategies To Fight Smart
OTT Threat: Top Strategies To Fight Smart

The KPN effect – declining SMS traffic and revenues
OTT Threat: Top Strategies To Fight Smart
In May 2011 KPN became the first mobile operator to report that
subscriber use o...
OTT Threat: Top Strategies To Fight Smart
Vodafone and China Mobile - The
impact of OTT spreads
Vodafone Group has also
ex...
OTT Threat: Top Strategies To Fight Smart
OTT Threat: Top Strategies To Fight Smart
OTT Threat: Top Strategies To Fight Smart
Outside Europe, China Mobile
stated in its H1 2012 financial report
that traditi...
OTT Threat: Top Strategies To Fight Smart
OTT Threat: Top Strategies To Fight Smart
What does the competition look like?
Key OTT providers range from nimble newcome...
OTT Threat: Top Strategies To Fight Smart
In August 2012, WhatsApp
announced that its daily traffic hit a
record 10 billio...
OTT Threat: Top Strategies To Fight Smart
How can mobile operators turn the tide and compete with OTT
providers on their t...
OTT Threat: Top Strategies To Fight Smart
All of these strategies build on the competitive capabilities and assets
that gi...
OTT Threat: Top Strategies To Fight Smart
Developing new ecosystems
Operators can play a central role enabling new ecosyst...
OTT Threat: Top Strategies To Fight Smart
Ensuring service reliability and quality
Because the mobile operator owns and co...
OTT Threat: Top Strategies To Fight Smart
Subscribers’ use of OTT services
has proven to have a negative
impact on the tra...
OTT Threat: Top Strategies To Fight Smart

For the complete article, updates and to join the
conversation please visit:
ht...
© 2013 SAP AG or an SAP affiliate company.
All rights reserved.
No part of this publication may be reproduced or transmitt...
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SAP Mobile Services: OTT threat top strategies to fight smart

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The rise of Over-the-Top providers (OTTs) of mobile VoIP (mVoIP) and IP-based messaging is significantly altering the dynamics of the mobile services market.

The growing penetration of smartphones and mobile broadband, combined with the availability of open application programming interfaces (APIs) for handsets, has created an environment where third-party application and service providers can more easily develop and distribute mobile applications, including mobile voice-over-IP (mVoIP) and IP-based messaging applications.

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SAP Mobile Services: OTT threat top strategies to fight smart

  1. 1. OTT Threat: Top Strategies To Fight Smart SAP Mobile Services, Operator Guide 2013 Pamela Clark-Dickson, Senior Analyst, Informa Telecoms & Media.
  2. 2. OTT Threat: Top Strategies To Fight Smart The rise of Over-the-Top providers (OTTs) of mobile VoIP (mVoIP) and IP-based messaging is significantly altering the dynamics of the mobile services market. The growing penetration of smartphones and mobile broadband, combined with the availability of open application programming interfaces (APIs) for handsets, has created an environment where third-party application and service providers can more easily develop and distribute mobile applications, including mobile voice-over-IP (mVoIP) and IPbased messaging applications.
  3. 3. OTT Threat: Top Strategies To Fight Smart
  4. 4. OTT Threat: Top Strategies To Fight Smart The KPN effect – declining SMS traffic and revenues
  5. 5. OTT Threat: Top Strategies To Fight Smart In May 2011 KPN became the first mobile operator to report that subscriber use of OTT voice and messaging applications – in particular, WhatsApp – had caused a decline in voice and messaging traffic and revenues. The operator found that 85 percent of its Hi subscribers were using WhatsApp, usage that resulted in a year-on-year decline of 24 percent in outgoing SMS traffic by Q3 2011. Despite KPN’s attempts to stem its declining SMS traffic and revenues through the introduction of integrated tariffs - which included a mixture of voice minutes, SMS and mobile data - the year-on-year decline in SMS traffic among KPN’s overall consumer mobile customer base accelerated from 19.6 percent in Q3 2011 to 32.7 percent by Q2 2012.
  6. 6. OTT Threat: Top Strategies To Fight Smart Vodafone and China Mobile - The impact of OTT spreads Vodafone Group has also experienced a decline in its SMS traffic and revenues, partly because its subscribers preferred to use OTT alternatives. The operator’s 1Q 2013 financial results paint a fairly grim picture, showing a decline in messaging revenues across most of its operating divisions.
  7. 7. OTT Threat: Top Strategies To Fight Smart
  8. 8. OTT Threat: Top Strategies To Fight Smart
  9. 9. OTT Threat: Top Strategies To Fight Smart Outside Europe, China Mobile stated in its H1 2012 financial report that traditional revenues were under pressure from mobile operator rivals and new technologies that are replacing traditional communications services. As a result of this competition, China Mobile’s SMS and MMS revenues declined 2.6 percent yearon-year.
  10. 10. OTT Threat: Top Strategies To Fight Smart
  11. 11. OTT Threat: Top Strategies To Fight Smart What does the competition look like? Key OTT providers range from nimble newcomers to established handset manufacturers. Their ranks include: start-up companies such as WhatsApp, KakaoTalk, Viber Media and Line; handset vendors such as RIM (BlackBerry Messenger) and Apple (iMessage); and South Africa’s MXit, a combination mobile instant messenger and social network.
  12. 12. OTT Threat: Top Strategies To Fight Smart In August 2012, WhatsApp announced that its daily traffic hit a record 10 billion messages. This represents a five-fold increase in the six months since March 2012, when WhatsApp’s average daily traffic was 2 billion messages. Apple announced in June 2012 that users of iMessage had sent 150 billion messages since the service’s launch in October 2011. Meanwhile, South Korea’s KakaoTalk managed to significantly reduce SK Telecom’s SMS traffic.
  13. 13. OTT Threat: Top Strategies To Fight Smart How can mobile operators turn the tide and compete with OTT providers on their turf? Informa has identified five strategies for mobile operators to pursue:   Emulation.   Partnership.   Block access.   Restructure prices.   Do nothing.
  14. 14. OTT Threat: Top Strategies To Fight Smart All of these strategies build on the competitive capabilities and assets that give operators the edge over OTT players. Put simply, the operators alone own and control their existing network assets. Operators also own and control their subscriber base because of the long- standing billing relationship they have with their customers. This position of strength allows them to pursue two distinct courses of action.
  15. 15. OTT Threat: Top Strategies To Fight Smart Developing new ecosystems Operators can play a central role enabling new ecosystems and innovation. This is possible because network infrastructure vendors are exposing application programming interfaces (APIs) associated with their equipment. The result is new and innovative services that could conceivably connect into multiple network assets, including voice, voice-mail and messaging infrastructure. This would also position mobile operators to provide a network or application-based converged communications service, as well as a range of value-added services around communications.
  16. 16. OTT Threat: Top Strategies To Fight Smart Ensuring service reliability and quality Because the mobile operator owns and controls the network, it alone can ensure service reliability and quality for subscribers. OTTs, on the other hand, can exercise relatively little control over reliability and quality of service. What’s more, mobile operators own and control the billing relationship, assets that position it to charge subscribers for the use of OTT-like services, either through a monthly subscription or on a per-event basis. Alternatively, the operator could include free access to these OTT-like services as part of an existing, or new price plan, that may also include voice minutes, SMS and/or data.
  17. 17. OTT Threat: Top Strategies To Fight Smart Subscribers’ use of OTT services has proven to have a negative impact on the traffic and revenues many mobile operators generate from their traditional communications services. However, it is possible that OTTs could act as a catalyst for operators to compete by creating far richer OTT-like services that bind subscribers to their networks. As always, execution will be key.
  18. 18. OTT Threat: Top Strategies To Fight Smart For the complete article, updates and to join the conversation please visit: https://community.sapmobileservices.com Download the complete guide here: http://sap.com/mobileoperatorguide
  19. 19. © 2013 SAP AG or an SAP affiliate company. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices. ©  2013 SAP AG or an SAP affiliate company. All rights reserved. 19

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