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Telcos face threat from over-the-top providers

Telcos are going to need to reconsider their business model, according to a report by Ovum.

Telcos could face revenue loss to over-the-top operators unless they collaborate with them, according to a new report by Ovum.

Nicole McCormick, senior analyst, telco strategy at Ovum, said over-the-top (OTT) operators are becoming a real threat to telcos and they need to start taking them more seriously.

"OTT players are here now in the Australian mobile market, and more are set to come, so there is no way to stop them," McCormick told Computerworld Australia.

"Many OTT services are advertiser supported and growing audiences is important to them. They can go wherever the internet is available, so barriers to entry are very low. In China and South Korea, IP based messaging and MVoIP platforms have had a devastating effect on SMS revenue."

“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.

"We highly recommend that operators in Australia and the rest of Asia be on guard. These OTT players can have extremely low tipping points before they go viral quickly.”

McCormick said there could be several advantages of telcos partnering with over-the-top providers, such as telcos needing to spend on their own services.

However, telcos which are slow to react will undoubtedly face revenue loss, she said.

“Revenue loss in traditional services is unavoidable, but there are new revenues available if MNOs [mobile network operators] can find common ground with OTT players,” McCormick said.

“A divide is emerging in Asia between those operators that are well on their way to a ‘compete and collaborate’ transformation and those that are not.”

Over-the-top providers have come under the spotlight. Edward Willett, commissioner at the Australian Competition and Consumer Commission (ACCC), recently said the competitive threat for telcos in the future is going to be the over-the-top players like Google and Apple.

The NBN will also give over-the-top providers easier access to Australia’s telecommunications infrastructure.

“At the moment it’s not viable for [companies such as Google and Apple] to resell DSL or VoIP because it’s too complicated [and] it’s too messy,” Rene Sugo, CEO of MyNetFone, told Computerworld Australia recently.

“But if NBN [Co] lives up to the expectation of providing high quality ubiquitous broadband with very smart business-to-business systems, then it would definitely open the door for one of these non-telco [companies] to come in.”

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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