Telco vs Over the top services :
A three sided Business Model
Is it war or the beginning of a new era of OTT-isation with enough growth for all players involved?
IDATE monitors permanently telecom and internet markets and Vincent Bonneau, Director of the Internet Business Unit, designed a new concept dealing with 3-sided business models for digital gold mines.
What revenues for traditional Telecom Services and OTT services – 2007-2015?
If we compare revenues in telecom services and OTT services from 2007-2015, we can observe flat revenues for traditional telecom businesses being around 6bn EUR – in opposite OTT service revenues are skyrocketing to reach 1.7bnEUR in 2015.
Telecom Operators tend to open Digital Divisions in their corporations and it seems obvious that they tend to get a part of the pie in OTT businesses. But is war between pure OTT players and telcos inavoidable?
Beyond two-sided models: three-sided models!
It is easy to assume that by talking of ‘Telco vs OTT’, it is a simple question of these two sets of players battling it out to provide the same kind of services to the same set of users, and thus competing for the revenues which come attached to their service use (be it in the form of direct payment, advertising or any other model). However, the real picture is much more complex, often involving other sets of players, and there can even be models where partnerships between the telcos and OTTs exist.
The five parts of the Telco vs OTT equation
The five parts of the Telco vs OTT equation are outlined in the figure below:
Third part: Transformation of telcos into OTTs
The third part of the equation is what could be classed as the of telcos. Here, the telcos provide services which traditionally belong to the OTTs. For example, in the case of communications, as indicated in the figure above, Telefónica has launched TU Go and TU Me which are OTT communication apps; a similar approach holds for Orange with their Libon app. On a broader scale, the GSMA is pushing for joyn, using Rich Communication Suite enhanced (RCSe), which aims to provide for multimedia communication across operators with the same level of ease of use as traditional voice and SMS. But it is not only in communication services where telcos are providing OTT-style services. In the online video-hosting space, Orange has acquired Dailymotion; in the payment space, Telefónica is investing in Boku; and NTT DOCOMO is investing in Evernote in the cloud storage space.
Telco OTT initiatives in communications
Also notable is the way that some telcos have set up a ‘digital division’, with the specific target of discovering and innovating in new growth areas made possible by the digital age. Such new growth areas are often the segments in which OTTs primarily work, such as cloud, applications, video and media and advertising. Telefónica Digital is one such example.
Project Manager & Head of the Internet Business Unit at IDATE