Is It a Phoney War?

­There are now more than 80 OTT-style Internet services run by telecom operators, according to a new study published by analyst firm Disruptive Analysis. The report suggests that the trend is accelerating, and represents a major possibility for the industry over the then five years.

One of the loudest debates in today's telecoms industry concerns the response of traditional network operators to so-called "over the top" players. However the report shows there is another option -- Telcos can launch their own Internet-type services.

"Telecom operators need to go on the attack," said Dean Bubley, the report's author and founder of Disruptive Analysis. "They must exploit the scale and 'viral' adoption of new services by billions of Internet and smartphone users, using similar tactics to the familiar web- or VoIP (Voice over Internet Protocol)-type providers. It is no longer enough to rely on slow-moving standards or cumbersome collaborations. Telcos need to act alone, or with specialist innovation partners".

OTTs are companies just as Facebook, YouTube, Skype, WhatsApp and Netflix, which offer growing and profitable services "over the top" of raw Internet access from mobile or fixed telcos.

As Facebook's recent $100bn IPO filing demonstrates, such companies are deriving huge value from applications that ultimately depend on operators' broadband infrastructure. And this is happening just at that time when telcos are starting to see their traditional voice and messaging business flatten and start to decline. The value in "services" seems to be shifting to the web.

But all of these options face challenges. Net Neutrality laws and various innovation limitations stand in the way of application-based charging. Internet companies show little need or inclination towards paying for "quality", especially on networks with poor coverage. Disruptive Analysis' previous technology has shown that RCSe's success is highly unlikely.

However, according to Disruptive Analysis, many telcos already offer their own OTT-style services via generic Internet access. The study identifies more than 80 operator initiatives of this type, spanning four main service categories:

Telco-OTT has its own opportunities and challenges. Few services are easy to monetise, and experiment will be needed. Nevertheless customers want open-Internet services - they like the choice and flexibility, and that trend is unstoppable.