logo_tyntec_rgb_xs.jpegIn the lead up to the Olympic Games this month, London added Wi-Fi to its subway system in an effort to help keep communications among visitors open. But last week it was clear that mobile engagement issues were taking their toll when an increase in social media began interfering with mobile networks on which the games themselves depend.

The International Olympics Committee asked viewers to "use another means" to send texts and tweets because the activity was overwhelming operator networks. Many users turned to over-the-top content (OTT) to offset the networks and streamline communications as a result.

Over the Top and In Demand

These issues may be surprising, considering the advanced infrastructures in place and our increased expectations for faster than fast networks that power our mobility. However, a new study by tyntec, found that US operators are better prepared to more effectively deal with and profit from OTT services compared to European operators.

Previously, tyntec reported there was great opportunity for younger populations to utilize OTT services, which can help users communicate more efficiently and lowers costs associated with traditional SMS technology. This new report continues to emphasize the opportunity available as well as the discrepancies that exist across countries to implement and facilitate these services.

The report by mobileSQUARED and sponsored by tyntec, OTT: How Operators can overcome the Fragmentation of Communication shows a considerable discrepancy in attitude and a huge lag in uptake between Europe and the US:

  • 100 percent of US mobile operators are already partnering with OTT providers, while only 18 percent are currently doing so in Europe.
  • 25 percent of European operators have already seen losses in revenue by up to 5 percent. The US has yet to see any decline in revenue.
  • Almost 75 percent of European operators anticipate OTT will impact revenue losses by up to 11-15 percent in the coming years. In comparison, the US is bracing for losses of up to 30 percent.
  • 42 percent of operators believe that over 40 percent of their customer base will be using OTT services in 2016.
  • OTT blocking and “walled gardens” are preventing adoption in Europe; whereas, the US is well positioned to profit from OTT, in part, because of our flat rate plans and infrastructure. 

Overall, the study suggests that European mobile operators feel more threatened, with 79 percent of European operators indicating that OTT clients on smartphones are a threat to traditional SMS and voice-based services.

An Era of Proliferation and Fragmentation

When we talk about OTT services, what exactly do we mean? Applications like Skype and What’s App are best known, with Skype leading the OTT charge with over 900 million users spending over 1 billion minutes a day. And while in 2012 20 percent of global smartphone users actively use OTT services, it is predicted to reach 45 percent by 2016.

So why the fragmentation? As OTT services expand and attract more users, it’s expected that more companies and developers will look to capitalize and flood the market with OTT services. Until then however, a majority of the existing proprietary OTT (Over-The-Top) communication service providers do not permit cross-platform functionality, therefore limiting the capability of their services. As the report puts it:

Consequently, the rise of these OTT services has created an era of fragmented communications in which consumers cannot easily communicate outside the ‘walled gardens’ of their respective service/app. This weakness presents mobile operators with an ideal opportunity to adopt a key role in enabling OTT services and associated revenues, as they seek new business models to offset the decline in voice and messaging revenues."

Here, Thorsten Trapp, CTO of tyntec discusses the latest figures and forecasts of the whitepaper and what they mean for Operators.

Global events like the Olympics help to showcase the era of fragmented communications, helping us all better understand the need for more interoperability and the opportunity the industry has to improve mobile communications. But it shouldn’t require such wide-scale events to highlight the lag -- anyone who has ever sent a text only to have it arrive hours after, can appreciate the utility of OTT services.