Two analysts from Analysys Mason, Cesar Bachelet and Stephen Sale, presented at Telecoms Tech World on the topic “How can operators make OTT/VAS work for them?” The theme is familiar—how over-the-top (OTT) applications challenge traditional mobile operators—but their session offered practical, forward-looking insights.
Mobile operators have long seen OTT applications as a threat; WhatsApp replacing SMS is one common example. Yet the reality is more nuanced: OTT services can also become allies if operators adapt strategically.
Stephen began by predicting deeper integration between application providers and operating systems. He pointed out how Apple embedded native Twitter, Facebook and Flickr functionality into iOS. Google has followed a similar path in Android, replacing the familiar SMS icon with Google Hangouts, a cross-platform messaging solution that brings IP messaging closer to the core user experience. Stephen also suggested Microsoft may follow suit with Skype integration, a move that appears plausible given work on Windows 8.1.
The significance of native integration is that features which previously required a separate app are being built into devices. That increases the user base for OTT services, reduces reliance on SMS, and places additional load on operators’ networks. At first glance this may seem like a lose/lose outcome for operators, but the situation also opens new opportunities.
Analysys Mason’s presentation compared operator feature sets with those of major technology companies. The large tech players typically cover a broad range—voice, messaging, video, location and social—while mobile operators remain concentrated mainly on voice and messaging. Despite the broader availability of VoIP, uptake remains relatively low. Respondents cite reasons such as “I have plenty of minutes left in my contract,” and “I’m trying to limit my data usage.” Other barriers include perceived lack of benefit, reliability concerns on specific handsets, and setup complexity.
Usage patterns vary by age. Among 18–24 year olds, IP messaging use is much higher, with about half using such services daily. Stephen summarized this trend succinctly: “The youngsters are really leading the charge.” This demographic shift indicates where future growth in OTT consumption will concentrate.
Cesar focused on OTT video services for the television and their effect on Pay TV subscriptions. Analysys Mason’s definition for the study included Smart TVs and consoles while excluding laptops, tablets and similar devices. Their research found only 1% of Pay TV subscribers list online video as the reason to cancel their service. Instead, a larger share—28%—remain satisfied with free TV offerings, suggesting that online video alone is not yet a major motivator to “cut the cord.”
Interestingly, Pay TV subscribers are more likely than non-subscribers to own streaming devices and pay for OTT video, which suggests that Pay TV customers are often heavy consumers of multiple content sources rather than being replaced by them. While more demographic detail would be useful, it’s reasonable to infer a generational split similar to what’s seen with IP messaging: younger users drive OTT adoption, while older users remain more likely to maintain traditional subscriptions.
Cesar presented several practical approaches operators can use to capitalize on OTT video:
- Launch OTT services to extend reach beyond traditional platforms
- Deliver proprietary content to unmanaged devices to broaden access
- Offer platform and distribution solutions to OTT video providers
- Implement tiered broadband tariffs to monetize quality of service
- Integrate operator content delivery to TVs via unmanaged devices
- Incorporate popular OTT video content into Pay TV platforms
Stephen cited Virgin Media’s integration of Netflix through TiVo as a clear example of the last approach: by adding Netflix into their set-top environment, Virgin complements its own service with third-party content, reinforcing its role as the central hub for video. In this model, the operator becomes a one-stop shop for content, simplifying discovery and strengthening customer retention.
By positioning themselves as the primary entertainment hub—combining traditional services with carefully chosen OTT partnerships—operators can retain and even grow their customer base. The key is to embrace integration, create value through convenience and curation, and apply commercial models (such as tiered access or bundling) that convert OTT engagement into revenue.
In summary, the analysts made a persuasive case that OTT and VAS do not have to be purely disruptive. With strategic integration, targeted offers, and partnerships that place the operator at the center of content discovery and delivery, operators can turn apparent threats into advantages.
Do you think these strategies help explain how operators can make OTT and VAS work for them?