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How Should Telcos Embrace The OTT Threat (or Opportunity)?

Telecom firms around the world have been dealing with the issue of how to manage the OTT threat. While many have began this journey very recently, some telcos realized a lot earlier that the storm was coming.  Verizon had already made a partnership with Skype in February 2010, and Orange had launched its own OTT app Libon by 2012.  Those were the times when Whatsapp penetration was an insane as today.

The question of how to fight OTT’s has actually altered to the question of how to adapt and seize the OTT opportunity.  Swisscom, KPN, Orange, Telefonica and many others have worked on different strategies to better monetize data as a way to compensate the decrease in SMS and voice revenue due to the OTT effect.  Some of the methods these companies have applied (or tried to apply) are:

–          Partner with an OTT (in example: zero-rated Facebook app for X dollars)

–          Change pricing schemes:

  • Tiered bundles of SMS, voice and data (a more data centric approach)
  • Pricing based on data volume and speed (unlimited voice and SMS in most of the cases)
  • Integrate handset (smartphone) offers to data tariffs

–          Launch your own OTT app

  • Swisscom – io
  • Orange – Libon
  • Telefonica – TU me

The first method is a matter of negotation, and the second requires thorough calculations.  The third method on the other hand is unique and has the potential of creating a success story.  Among the examples above, Telefonica TU me is a bit of a failure. Libon’s Orange and Swisscom’s io could be considered as “almost” successful.

Let’s take a closer look at the Libon case which I find pretty interesting.  Libon is a rich communication services launched in 2012. Just like other OTT communication apps, Libon has instant messaging and voice over IP service.  I believe that it differs itself with three things:

–          Libon web allows you to access the service from any connected device. In addition, if you have Libon and your friend does not, you can still talk to him through Libon’s web interface.

–          The app allows you to do app to network calls. More ove,r you can call a non-Libon person from the app (described as Libon out) just like Skype out calls. Once you download the app, you are given 1hour free app to network calls for around 20 countries.

–          Libon is intregrated into the price plans of Orange’s B-brand Sosh which targets the youth segment.  For example, when you buy the “Option Sosh International” you get unlimited app to network calls to 25 countries just for 5 euros per month!  Similarly, there is a 50 minutes pack for 1.99 dollars.

libon orange

Such a model does not only help increase ARPU or at least minimize the decrease, but it also an opportunity to acquire new customers and decrease churn.  In the near future, just like the massive decreases telcos are facing in their SMS revenues, the voice revenues will begin decreasing because of Skype, Tango, Viber and other VoIP apps. So, Telcos that have not yet lost the VoIP game, should seize the opportunity of providing their own VoIP services with app to network calling capabilities and clever price plans.

Here is my previous article on “the war between Telcos and OTTs”:

Pinar Bilgic
a novice poet who describes herself as an innovative and a creative thinker ; founder of; member of SOGLA (Social Entrepreneurs Young Leaders Academy); almost an entrepreneur

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