CSPs in the World of OTTs: How Would they Win the Battle?

Abstract

OTT (Over the Top) players provide services carried over the networks deployed by communications service provider (CSP) without it being involved in planning, selling, provisioning or servicing them. CSPs cannot book revenue directly for these services and are left only with the revenue generated for the data that is transferred. CSPs thus fear that they would eventually turn into mere dumb pipes in the future telecommunication ecosystem. The explosion of smartphones has helped operators increase Average Revenue Per User (ARPU) by getting people subscribing to data services, but it has also started to threaten their traditional revenue model due to increase in the usage of OTT applications such as WhatsApp, Google and Facebook. Gradually people world over are using WhatsApp more for texting than the traditional short messaging service (SMS). Similar trends are visible in music downloads, video chat and even voice calls. This paper primarily discusses about the various segments of OTT players, the current services and potential future services offered by them. It would also talk about the impact of OTT players on the CSPs traditional business of providing voice, data and value added services. It would present the value chain analysis for a telecom operator and various strategies that an operator can adopt to counter the threats from OTT players. Towards the end, it would present specific recommendations for CSPs based out of India.

Keywords: OTT, SMS, CSP, Revenue Loss

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