OTT: how should carriers respond to the threat?

19 June 2012 | Guy Matthews

Carriers have become preoccupied over the past year, not to say convulsed, by the apparent threat to their business posed by incursions from so-called over-the-top (OTT) players.

Analysts have become fond of warning that OTTs, at best, want to steal a free ride over carrier networks. At worst, they are formulating strategies for actively assuming the role of the traditional telco.

There’s vigorous debate about what the right response should be. Telefónica Digital is a division of Spain’s incumbent telco, established with the brief of gestating novel approaches to challenges just like this. If OTTs are going to come at us with innovative and aggressive business models, then we will fight fire with fire, goes Telefónica’s thinking.

Telefónica Digital has consequently launched its own OTT offer, an app designed as a Skype-beater that allows VoIP calls and messaging, and has other value-added features like photo sharing. If such services are going to run over Telefónica’s network, better that Telefónica provides them.

It is of course a lot easier to talk about innovation than to practise it in the real world. It’s not every day that somebody comes up with a market-changing new technology. It’s possible to launch new types of service, but they don’t come with a guarantee that anybody will want to pay for them. Better perhaps to innovate in other ways, in how you run your business, and in how you work with other types of player within the wider communications ecosystem towards a common goal.

If a carrier wants to attack the cloud market, or M2M, or just to launch LTE services ahead of rivals, then who can they share the journey with in the interests of making it a profitable one?

Chinese vendor Huawei claims that it represents an ideal partner for those in the mobile service provider community, struggling with profitability as traditional revenues decline and their base of competitors widens. Huawei’s Value Growth Solution, it says, is a way for cellcos to make more money out of what they already do by a variety of means - optimising networks, refining the management of traffic, allowing speedier customisation and integration of services.

But there’s no quick fix for the sort of drastic changes in market dynamics that make nonsense of an apparently healthy company’s roadmap. Research in Motion was an innovator in the smartphone market, but hasn’t been able to outfox subsequent innovators.
Innovation only really produces results when it is allied to consistency, vision and stability.

Guy Matthews can be contacted at: