Mobile operators will lose $14bn to OTT services this year

Report says mobile network operators will lose $14bn of potential sales to over the top services this year

The growth of over the top (OTT) messaging, chat and VoIP services is creating a headache for mobile network operators (MNOs), according to a new study from Juniper Research.

The study suggests that, cumulatively, MNOs stand to lose out on potential sales of $14bn this year to smartphone applications such as WhatsApp, Snapchat and Facebook Messenger.

Such apps are known as OTT services because they literally run ‘over the top’ of an MNO’s network. However, despite their heavy and increasing data load, they do not generate any sales for MNOs.

Their rapid growth – as consumers and enterprises alike continue to embrace social media as their main means of communicating – presents a problem for MNOs.

Juniper Research surveyed a number of operators from around the world including Vodafone.

The report found that, between 2011 and 2013, the average number of SMS or text messages sent per user across Vodafone’s network declined by almost 15%, from 201 to 172.

The decline was even more marked elsewhere in Europe. In the Netherlands, KPN subscribers are now sending 60% fewer text messages than they were three years ago, while users of Vodafone Spain are sending 41% fewer texts.

Text messaging has historically been an important revenue stream for MNOs, and its decline is now calling into question the relevance of including SMS in consumer and business bundles, said Juniper.

More on OTT services

The impact of 4G, which makes mobile VoIP a more viable option for many users, will compound the problem of lost revenues, the report said.

By the end of this year, 120 million consumers worldwide are expected to be using an OTT VoIP service on their smartphones.

Juniper’s report called for MNOs to better engage with 4G voice services, and consider new areas of revenue generation, such as mobile payments, machine-to-machine (M2M) communications and operator VoIP.

Such revenue streams generated around $7.2bn last year, and could generate a cumulative $66.5bn net increase in the next four years, Juniper said.

Computer Weekly members can download an exclusive report from Juniper Research on the impact of OTT on MNO business models.

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