Finders Keepers

A Juniper research study released this week has claimed that voice and messaging traffic lost to OTT (Over the Top) players, such as WhatsApp, Facebook and Skype, will cost network operators $14 billion in revenues globally this year. The study says that this is up 26% on 2013.

I wonder for how much longer our industry will track the voice/messaging revenues that have ‘lost’ to digital players – a term we should probably drop now, given how entrenched these challenger services are. Markets are not static, and digital players are not ‘stealing’ operator voice/ messaging revenues.

The emergence of OTT-style services over the past decade is an evolution, which will ultimately see some operator services superseded as markets mature. To continue to see it as ‘lost revenues’ will be at a cost; too busy hand wringing over dwindling revenues, while missing the opportunity to redefine business models and product portfolios that will thrive in the digital economy. As analyst Mark Mortensen, Analysys Mason, put it at the AM Summit last week: “Do we have the guts to face this challenge? Or, is the industry reaching a Kodak moment?”

The Juniper study makes it clear that operators still have an opportunity to shore up revenues by focusing on full service provision rather than simple connectivity – for example, M2M and mobile money. Additionally, the report recommends that operators implement direct carrier billing to retain a foothold in lucrative mobile content space, and that they enhance their analytics packages to monetise consumer ‘Big Data’.

A recent study commissioned by AsiaInfo went further in its recommendations – highlighting the gains operators in Western Europe could make by partneringdirectly with OTTs and other DSPs in developing new services. According to independent research, undertaken by consultants Northstream, operators could achieve at least €2.2 billion over the next three years in additional OTT profits if they professionalized their approach to identifying and launching new partnership services.

The opportunity to find new revenues is certainly there for the taking. It’s whether the industry is ready for the culture change and efforts required to carve out a sustainable role in the digital value chain. Whatever we do, we need to be proactive as an industry in making the cultural, corporate and technological changes necessary to support this transformation.