Multiple blows for mobile operators

Whether it is instant messaging or Over The Top (OTT) voice, mobile operators will feel the effects of outlaying vast capital sums for supreme network coverage and data speeds with very little revenue in return, instead providing a platform for service providers to rapidly capture significant revenue.

Forecasts from the global analyst firm reveal that OTT VoIP will cost the global telecoms industry $479bn in lost cumulative revenues by 2020, which represents 6.9% of cumulative total voice revenues. So whilst over-the-top (OTT) VoIP services are not about to replace traditional telephony, they will have a marked impact on telcos’ revenues over the next eight years. Fortunately for the operators in South Africa the quality and ubiquity of reliable 3G services has prevented widespread adoption of these services and will continue so until the network data throughput supports this service.

The upsurge in instant cheap – or free – instant messaging is also becoming a problem for mobile operators who are expected to lose $54 billion in SMS revenue in the next four years, also according to Global research company Ovum.

Ovum’s emerging markets analyst, Richard Hurst, says “in all fairness”, local operators have seen this SMS threat coming for a long time. He points to Mxit – a concept conceived as far back as 2003, as a platform that has evolved into a major IM player in SA. Mxit currently has 40m subscribers and still no movement from the operators on pricing.The operators are dependent on cross-platform failure and the public’s fear of internet security which drives banking and other notification services to use traditional SMS services and in the main will continue to preserve some revenue.

SO how will operators react. Ovum recommends that operators develop or deploy applications that link cloud services with telephony usage. They need to provide content, relationships, and history within a service, irrespective of device or access method. Very importantly, Ovum also sees the continued existence of the telephone number as a key asset for telcos as it is central to their relationships with their customers.

“The major threat posed by OTT VoIP is that it weakens customers’ attachment to their telephone number and transfers their attachment to a new address. This may turn out to be a more significant factor than the direct impact on telephony revenues,” explains Green. “Operators should use telephone numbers as the identifier and address for cloud-based services, allow customers to choose numbers that are relevant to them, and develop more application-to-person SMS applications.”

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