Keeping your enemy close
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Keeping your enemy close

Europe’s wholesale telecoms community may be learning to draw comfort from the thought that over-the-top (OTT) services may be as much an opportunity for them as a threat.

Europe’s wholesale telecoms community may be learning to draw comfort from the thought that over-the-top (OTT) services may be as much an opportunity for them as a threat.

The biggest and best known of the OTT brand names, for sure, have need of good quality backbones that they can depend on to keep their customers happy. Their modus operandi might be to bypass the retail end of the traditional telecoms market, but there’s no getting around the dues they have to pay in terms of wholesale broadband network capacity.

But if Europe’s carriers are tempted to see any light at the end of a troublesome tunnel, then they might want to look at other parts of the world to see how fast evolving market dynamics are creating serious waves.

China’s Ministry of Industry and Information Technology (MIIT) has recently become concerned that the money paid by OTTs to the country’s three major carrier names for network capacity may be some way shy of what they are taking from the other end of the industry.

OTTs like Tencent are providing services to something like 700 million Chinese subscribers – services like multiplayer online games and social networks. That would equate to practically the entire OTT burden faced by Western European networks, all from the one organisation. No surprise that MIIT is pondering an additional OTT levy of some sort to offset the cost that these type of services impose on their hosts.

Could such a levy ever happen in Europe? It may simply become necessary one day – like it or not. Could it be straightforwardly agreed and seamlessly imposed? Let’s imagine not. It’s easier to foresee a field day for lawyers as much as anything else.

Take a very different type of Asian economy. South Korea’s major network operators have found themselves host not to a behemoth like Tencent but to something perhaps far more threatening. A small battalion of often very small OTTs has developed over the past year or two, drawn in particular by the spectacular bandwidth bounty of the country’s advanced next generation access networks. No country in the world has as much fibre attached directly into homes and businesses, and few can boast more impressive LTE coverage. And these little cottage industry OTTs are lapping it up like so many thousands of mosquitos at the neck of a tormented mammal.

Some, like Kakaotalk, are the type of OTT that any European carrier would recognise. But others are more elusive – not just small but highly disruptive, set up to make someone rich very quickly without any kind of a nod to a conventional P&L model. These are not the kind of OTTs that a wholesaler will find beating a path to their door looking for a deal on capacity.

If this trend gets a hold in Europe, then the type of OTTs we used to think of as enemies are going to seem like old friends.

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