Why Telecom Operators Need an OTT APP?

May 5, 2019 | by Sadman Safiul

The telecommunication industry has already gone through many phases. In the beginning, it was only landline connection depending on the metal wire for transmission. Then along with the time, technological advancement was done, and the use of radio frequency for transmission started that introduce the idea of mobile phone. In the 90s digital radio technology, GSM or CDMA came into the scenario which set the stage for turning mobile devices into Internet devices and changed the overall outlook of the telecommunication industry. At 1993, all over the world, there were 91 million mobile connections. But if we look at the numbers of mobile connections in 2010 it was nearly 5.2 billion. And this huge customer base was connected only with the service of the telecom companies.

While 2G phones were growing more popular it also indicated the growing demand for data and greater data speed. As a result of the growing demand the next generation of technology, 3G, was invented and commercially introduced in 2001. Throughout the 2000’s era, massive technological advancement took place in the sphere of network and mobile devices. VoIP technology also expanded and the introduction of Skype in 2003 was a major milestone for VoIP. Later in this era, VoIP and instant messaging software applications like Viber, WhatsApp, Facebook Messenger were introduced. All of these deliver audio, video and other media over IP network bypassing the telecom operators network but in many cases using their service. That’s why these are called OverTheTop (OTT) applications.
These applications managed to gain popularity quickly because of the advancement of smartphones and the IP network’s speed. Also the convenience and features people could get from these applications influenced more and more users to join the OTT services. As a consequence, the telecom operator began to lose revenue from their core services like SMS and Voice.

The telecommunications industry altogether will lose $386 billion between 2012 and 2018 according to Ovum, a London-based research and analytics firm.
According to Informa’s World Cellular Revenue Forecasts 2018, global annual SMS revenues will observe a downfall from US$120 billion in 2013 to US$96.7 billion by 2018, due to increasing acceptance and use of Over-The-Top (OTT) messaging applications.

Also, as a result of VoIP by 2020 the telecom industry worldwide will observe a loss of revenues approximately worth $479 billion which is 6.9% of the total revenue from voice. (Source: “The Future of Voice” by Spirit DSP)
Another report “Consumer OTT VoIP Outlook: 2013 to 2018” by Ovum, highlights that the OTT VoIP market is growing at a rate of 20 per cent. Its application’s usage will reach 1.7 trillion minutes by 2018, which translates to $63 billion in lost revenue. According to this study, as a result of increasing demand for online applications for messaging, by the year 2016, telecom operators lost revenue worth $54 billion in messaging services.
A study from Juniper Research has calculated that the consumer migration from operator voice and text services to OTT (Over the Top) messaging services and social media cost network operators nearly US$104 billion in 2017.

So, in this alarming situation what can be done by the telecom service providers to regain the lost ground? Generally, Telecom Service Providers take some reactionary measures by adding new features to their traditional service but that would not help. They need to aim for long time solutions. Possible solutions they could consider are:

Build Partnership with Existing OTT Providers

This option will enable both the parties to mutually benefit from the coverage each platform provides. This strategy helps the telecom operators to keep the traffic and garner a share of OTT revenue. But this does not let the Telecom Service Providers control the service of OTT applications.

Build Advanced Technologies

The major progress key of the telecom service providers is their network services. By building advanced networks and adept new technologies like 5G, telecom operators could offer greater bandwidth that enables them to provide competitive rates for growing data demands due to OTT services.

Provide Own OTT Service  

Telecom Service Providers can build their own OTT service. By building an OTT service of their own they could have full control over the service that could have been impossible in case of partnering with or buying an OTT service. Telecom Service Providers can build their own world of OTT services in order to engage their customers. This approach comes along with many more opportunities.

Generate More Revenue

Telecom service providers can check their falling revenue by having OTT services of their own. Telecom operators already possess a huge customer base in the market and for this reason, it is very usual to gather a crowd in their OTT services and generate ways of creating more revenue.

Achieve Credibility of the Customers

Telecom service providers can gain more trustworthiness of the customers by launching OTT app of their own. Customers have the feeling of served well as they get a compelling 360 package of communication by their operators. Thus the relationship between the customers and service providers get to a new dimension.

Offering Value Added Services According to the Demand

Operators already possess a huge customer base and eventually, they have access to an enormous volume of data. By mining these data, operators can easily identify the needs of the customer and build new services according to the demand. Services like health care, e-commerce and mobile learning will enable the operators to meet various needs of the customers.

Add Wider Feature to Core Services

By creating OTT application of their own, telecom service providers have the opportunity to introduce wider features to their customers like stickers, BOT service, chat based games, smart ads etc. These features enhance their core services and offerings to the customers.

Attract Subscribers of Other Networks

By providing an OTT application, a telecom service provider could easily attract subscribers of other networks. A quality OTT service will definitely attract customers regardless of their networks and this process can help telecom operators to build strong relationship with the customer base of other networks and generate revenue. Also this could be a way of promotion of their own brand.

Though this approach of providing own OTT service comes along with many positive points which enable them to regain their lost ground, have robust customer relationship and enter into broader markets, this not the fastest option. This approach also comes along with some drawbacks, as the telecom service providers do not possess the required expertise to develop such a service. They need to develop a team of quality developers which would consume time and high investment. Also, telecom service providers would have to face some unnecessary hindrance because of their lack of experience in such solution development. It would be more rational decision to build such OTT solutions with already established solution provides. And here comes DuComm – Enterprise Communication Platform which is a ready-to-go white label OTT solution. DuComm’s expertise and experience would make it lot easier for a telecom service provider to build a branded OTT service.  Also, this would give the telecom operators a certain freedom to focus on customer insight and find a niche that would differentiate their service from the existing offerings.

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