Does OTT Cost Telecom Industry $37B a Year?

By Gary Kim September 26, 2013

Over the Top (OTT) communications will generate $53.7 billion and have 2.1 billion smartphone users by 2017, a study by mobilesquared suggests.

The study suggests Skype is costing the telecom industry $100 million worth of revenue each day, or about $36.5 billion a year.

That likely assumes that Skype’s 280 million active users use two billion minutes each day on Skype calling, and that nearly all those minutes represent lost telco revenues. Many would likely suggest two different processes are at work.

In some cases Skype likely does directly cannibalize usage that otherwise would have been charged on a phone account and therefore created revenue for a service provider. 

Image via Shutterstock

But it also is the case that much of that activity simply would not have occurred at all, were Skype not available.

Still, fully 43 percent of mobile operators now say that Skype presents a major threat to their revenues.

Of the operators interviewed, 14 percent claimed that OTT services have created a loss of messaging revenue of more than 21 percent in the last year. The same sort of process undoubtedly is at work for messaging services as well.

Some traffic likely was shifted from text messaging to over the top alternatives. But much of that over the top activity likely would not have occurred if text messaging were the only alternative.

To be sure, service provider executives do predict that users will rely on OTT messaging services to a greater extent in the future. About 20 percent of service provider executives surveyed estimate that more than 50 percent of their subscribers already use over the top messaging.  

WhatsApp has grown by 233 percent in just 12 months and now has 300 million users globally, the study suggests. In that time, WhatsApp daily messages sent have increased from two billion to 10 billion.

The tyntec-sponsored study surveyed more than 40 mobile network operators and mobile virtual network operators in 68 countries as part of the study.

The number of operators reporting no reduction in messaging revenues has sharply deteriorated from 62 percent of service provider operations in 2012 to 36 percent in 2013.

Although some mobile operators have created their own OTT services, this option is largely losing its appeal, the study suggests. IN 2012, about 26 percent of respondents were interested in doing so. In 2013, about 21 percent of mobile operators reported they were interested in doing so.

The percentage of mobile operators interested in partnering with OTT providers grew to 36 percent of respondents, up from 32 percent in 2012.

Edited by Alisen Downey

Contributing Editor

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