News07 July 2022Thomas Simoneit

OTT services put pressure on telcos

Some are making good money from it, others don't (yet) know how to pull it off: we're talking about over-the-top content (OTT), which covers the use of apps and services as well as the delivery of text, video and audio content over IP networks and internet access.

Juniper Research study: voice revenue is collapsing

According to a study by Juniper Research, telcos' voice revenue will drop by around 45 percent by 2024, while the number of OTT service customers is expected to grow by 88 percent over the same period. Voice isn't the only area where profits are falling - mobile OTT offerings are also driving down revenue from text messages. It's no surprise that shrinking margins are a major concern for most telcos. Looking into why consumers choose OTT services today quickly reveals the main reasons:

OTT applications are generally cheaper than comparable voice and data services from telcos - often even free or available for a one-time payment.
Easy, convenient access to a wide range of current OTT services means more and more people worldwide are exchanging messages, photos and videos.
Many OTT applications offer features that telco networks don't yet provide, or that aren't available across networks. WhatsApp, Viber, Signal and other messengers are a good example of the benefit to consumers: compared to plain SMS, these apps offer group chats, GIFs and stickers, photos, videos, contact information, voice messages and even a calling feature for conversations worldwide.

Growing number of OTT users strains networks

Falling revenue from OTT applications isn't the only problem troubling telcos. As more and more people use OTT services, data traffic keeps rising sharply. To get this under control, telcos have to invest in expanding and optimizing their existing infrastructure - at considerable cost. And as mentioned at the outset, OTT providers don't contribute to these costs, even though it's usually their services that make the higher bandwidths necessary in the first place.

Answering the OTT challenge with in-house applications

So how can telcos respond to the threat from OTT providers? One possible key to success is addressing the home market with customized applications. Rather than thinking exclusively in international terms, telcos can address local specifics and position themselves against OTTs - especially with their business customers - through USPs such as security-by-design and data storage within their own network.

One platform for many applications in B2All

The CreaLog Service Delivery Platform (SDP), a comprehensive Fixed Mobile Unification (FMU) platform for communication, signaling, media and messaging applications, takes the work off the telco's hands: internal development and staffing costs stay low, the telco's own OTT service is developed and provided by CreaLog, and it's available on-premise or from the cloud. Nothing stands in the way of a long-term partnership!

For more information and discussion on this topic, join the Crealog Telco Summit on October 20/21, 2022 in Munich.

Or talk to our experts now and find out what CreaLog can offer you for customized telco OTT services.