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The threat to MNOs' Voice Revenues - Is an OTT strategy the answer?

POSTED BY Global Administrator
The challenges facing global MNOs’ voice businesses are well documented: competition, lower termination rates (the charges levied for landing traffic on an operator’s network), and the threat of mobile VoIP are all conspiring to bring down voice revenues in virtually all markets. Because revenues from data will only partially compensate the decline in voice revenues, traditional carriers are left in a difficult position. After all, they have to deal with the cost of network upkeep, high employee numbers and a less nimble organisational structure than new mVoIP players, in an environment where their core voice revenues are slipping away. At the same time, some mVoIP new-entrants have achieved startling numbers of voice and messaging subscribers in a very short space of time. Viber, for example, claims 100 million subscribers. Mobile video calling specialist, Tango, has achieved similar success, claiming 45 million active users. Both companies have been active for much less than five years. One problem though: the vast majority of these companies’ subscribers deliver no revenue, even though there are various potential models. These include “Freemium” models, where basic services are free and advanced service options are charged for; models where subscribers have to pay for calls that break out to the PSTN (similar to SkypeOut) and advertising- based models. One revenue model, however, stands out as being more interesting to MNOs than others. Several players, such as Nimbuzz and Rebtel are opening up their APIs (application programming interfaces) to third parties, allowing them to deliver mVoIP services themselves. While this may seem counter –intuitive, such services could easily extend MNOs’ reach to new markets and new subscribers, as well as reducing the likelihood that existing subscribers will churn to other networks. Ultimately rapprochement between OTT carriers and MNOs can only be good for the industry, and for the consumer, if it can be made to work. After all, as pricing of MNOs own voice services continue to come down, low-cost or even free services will become less attractive to the consumer, reducing the pull towards OTT services. Ironically, therefore, in the future the billing relationship that MNOs have with their subscribers may become pivotal in delivering revenues to OTT players as well.