What the expansion of the OTT sector means for the telecom sector

Commentary General Global 20 MRT 2014
What the expansion of the OTT sector means for the telecom sector

 

WhatsApp recently announced plans to add voice to its popular messaging app. Google and Line are now following, with Google Hangouts (according to rumours) and the Line chat app also getting VoIP functionality. There will likely be some differences in these services, with WhatsApp probably offering free on-net calls, while Line Calls offers the possibility to call fixed and mobile numbers. Line is taking on competition such as Skype, Viber and RingCredible with the new feature.

Looking at WhatsApp's plans against the background of Facebook's recent takeover of the company, the picture gets a bit more complex:

  • Facebook already has its own Facebook Messenger app, which is also having VoIP added.
  • Facebook earlier acquired Instagram, a photo-sharing app. Instagram a while ago added the possibility of sharing short videos (it's now gone a step further with a complete episode of a sitcom put on Instagram in 109 clips of 15 seconds each).
This shows that social media continues to expand its functionality:
  • Communication covers not just text (chat), but also audio (VoIP), video (video calls) and any possible attachment (from emoticons and stickers to audio and video clips) and metadata (tags, likes, location, presence).
  • Communication services expanded to entertainment services by sharing media (music, film, games).
  • Internet companies, such as Google and Facebook, are taking over business-to-consumer services.

This raises two questions: in what direction is the internet sector evolving and what does that mean for the telecom sector? An answer to the first question is difficult. Two points to make:

  • 'Be-all and end-all'. The same way telecom operators are focusing on bundles of fixed and mobile services, the internet companies are adding more services to their apps, both for communication in all its forms as well as media.
  • Focus. Specialisation also has a role, as it helps make it clear to the consumer exactly what an app offers. 
The answer to the second question is somewhat easier - and a bit threatening. The web companies have immense innovative power, financed by the advertising market, putting the telecom operators in the shade. This does not bode well for managed services (voice, SMS, TV, VOD). It's no surprise then that the over-the-top services are increasingly popular. Deutsche Telekom is positioning itself as the 'socket', into which the OTT sector can 'plug' their services. Airtel recently used a different metaphor, with a similar relationship: telecom and OTT are Siamese twins. Condemned to exist together, they can only make the best of it. The telecom sector can best focus on networks, connectivity and the lucrative broadband markets.

Related Articles