Third operator Cell C has assumed the adapt-or-die attitude of some of its global counterparts, taking what it says was the "tough decision" to embrace over-the-top (OTT) players, rather than try to block them.
In just over two weeks, the data string attached to the free instant messaging (IM) app WhatsApp will become free of charge for Cell C customers. While the offering is being introduced on a promotional basis for now, Cell C's executive marketing head Doug Mattheus yesterday indicated the operator was open to future partnerships with other OTT players.
This includes voice over IP (VOIP) services offered by OTT players, says Mattheus. Earlier this year, WhatsApp CEO Jan Koum said the company would soon offer free voice calls to its users - similar to BlackBerry Messenger's (BBM's) voice over WiFi service.
Mattheus says, while it is a difficult decision for the operator to make, it needs to embrace the new ways in which people are communicating. "It's a tough decision to make in our business, as OTT players do eat into revenue, but you don't want to be a caught with a warehouse full of Walkmans when others are offering iPods. We have to be aware of the new dynamics of communication, even if it seems counter-intuitive to embrace these."
He says, while it cannot be said what the future holds in terms of partnerships with OTT players, Cell C has already said it is going to embrace IM and associated services - and it would be difficult to make a U-turn on that decision now. Mattheus cites bundles and all-you-can-consume "buffet" offerings as two of the options the company may look into.
Cell C strategy
Cell C CEO Jose Dos Santos says the mobile ecosystem is changing dramatically and reiterates the company believes partnering - rather than fighting - with OTT players is the way to go.
The OTT tipping point was in 2012: messages sent via third-party applications, such as WhatsApp, overtook SMS volumes for the first time. Dos Santos says, however, there are ways of monetising the trend. "Mobile operators will not become dumb pipes if we form smart partnerships."
Citing the Apple versus Microsoft dynamic of old, Dos Santos says open models have proven to be more successful than walled garden approaches. In an open system, he says, partners should focus on what they do best. "For example, mobile operators on the network and billing and OTT players on innovative messaging solutions."
Dos Santos believes the complaint around OTT players getting a "free ride" - considering they do not pay for the infrastructure they use - does not hold water. "How can it be fair to charge partners for offering services they give away for free? [However], revenues generated from OTT premium services should be shared - that is fair."
He says the key to success will be a formula that allows OTT players and mobile operators to work together and share revenues.
Multibillion-dollar problem
Globally, OTT players have proven to be a major headache for operators. Ovum predicts the telecoms industry will lose a combined $386 billion (about R4.3 trillion) between 2012 and 2018 from OTT voice applications like WhatsApp, Viber, BBM and VOIP giant Skype.
In August last year, the GSM Association (GSMA) put together a White Paper outlining the OTT challenge, and the opportunity this presents for mobile operators. The paper points out mobile operators also benefit from the popularity of OTT services, due to increased data use and the fact that smartphone familiarity encourages wider data use.
But many operators still resent the OTT trend. Two months ago, Indian mobile operators' claws came out during a seminar around the issue of a regulatory framework for OTT services, organised by the Telecom Regulatory Authority of India. According to the Economic Times of India, operators demanded the regulator help them achieve a more level playing field for traditional operators against OTT players.
Meanwhile, China Mobile - the world's largest operator by subscriber numbers - has stated Internet companies pose a far greater challenge than its traditional rivals and has warned mobile operators the world over need to put plans in place to avoid becoming dumb pipes. The company's chairman, Xi Guohua, recently said China Mobile could not block the OTT trend and would have to adjust its strategies to adapt.
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