‘Over The Top’ mobile internet communication services such as Skype and WhatsApp are projected to cost the global mobile industry up to $182 billion in lost voice and messaging revenue over the next four years, according to research by MobileSquared, sponsored by mobile interaction service provider tyntec.
This trend is widely reported.
Almost weekly, new data reinforce the perception that mobile network operators are being relegated to “dumb pipes” while OTT services steadily erode traditional operator revenue from voice and SMS.
However, this MobileSquared study highlights a different angle. Rather than focusing solely on losses, the report identifies a largely overlooked opportunity: roughly $30 billion in potential revenue for operators if they strategically capitalize on off‑net traffic generated by OTT services.
Capitalizing on Off‑Net Traffic
MobileSquared forecasts that OTT communications will generate termination and interconnect fee revenues for mobile operators of about US$3.7 billion in 2012, rising to US$8.4 billion by 2016. Message traffic will dominate those revenues during the forecast period, followed by off‑net calls to mobile numbers. According to the report, incremental revenues from OTT interconnectivity could reduce the overall annual decline in voice and messaging revenues (estimated at US$30 billion) by more than 25 percent.
That estimate does not yet account for additional gains operators could realize through clever packaging of data bundles and offers that encourage OTT usage on their networks.
For operators that understand how to attract and grow off‑net traffic, the potential upside is significant. The remaining question is practical: how can operators effectively increase off‑net traffic?
Exploit Operator Assets and OTT Weaknesses
The global telephone network reaches approximately seven billion people—about seven times the size of the largest social network. At the center of this network are phone numbers, particularly mobile numbers. Mobile numbers are portable across locations, support SMS and voice, and are used worldwide. These characteristics create a clear differentiation between operator assets and many OTT players’ offerings.
Put simply, the combination of the global mobile network and mobile numbering is an operator asset that OTT providers do not inherently possess. That distinction opens opportunities to generate revenue from interoperability and interconnection.
Mobile Numbers 2.0
Mobile numbers are valuable because they can address a key weakness limiting OTT growth: fragmentation of communication. Currently, many OTT apps only allow messages or calls between users of the same service—WhatsApp users can message other WhatsApp users, but communicating with someone outside that ecosystem requires switching to another channel. This fragmentation undermines seamless communication.
Integrating mobile numbers into OTT services would create interoperability across platforms. Technically, this is achievable: mobile numbers no longer need to be tied exclusively to physical SIM cards. Operators can enable number usage in the cloud and associate those numbers with third‑party services, including OTT apps.
As the MobileSquared report explains, integrating numbers would let users step beyond the “walled gardens” of individual apps and be reachable via their mobile number. That interoperability benefits the entire value chain.
Consumers gain a seamless, cross‑platform communication experience. Operators re-enter the value chain and benefit from increased traffic on their networks, particularly lucrative off‑net traffic subject to termination and interconnect fees. OTT providers also gain: they can monetize the off‑net traffic their services generate by cooperating with operators.
The report highlights an additional advantage for operators with extensive global roaming and interconnect agreements: they are better positioned to terminate higher volumes of global OTT off‑net traffic and capture corresponding revenues.
In short, operators should prioritize embedding mobile numbers into OTT communications. The revenue logic is straightforward: when mobile numbers are involved, off‑net traffic—and the associated termination revenue—is generated.
Operators need to recognize and act on the assets they already control. By leveraging numbering, interconnect, and global reach, they can transform the OTT challenge into a revenue opportunity and mitigate the decline in traditional voice and messaging income.
You can learn more about OTT communications at Telecoms Tech World, held 4–5 June in London.