The recent news that WhatsApp has added a free voice calling feature to its Android app shows that it’s going aggressively after competitors like Skype and Apple’s FaceTime. It also suggests that, at a strategic level, Facebook is looking to be a leading player in the over-the-top (OTT) voice domain -- which can increase the shift of voice minutes from traditional voice to OTT voice. With a growing number of OTT applications flooding the market, operators need to figure out how to capitalize on this growing phenomenon by leveraging their unique ability to enable access, shape the user experience and track and analyze application usage.
But to start, what do apps like WhatsApp really mean for networks? OTT players need to realize that their business models are dependent on keeping users interested and engaged with the apps. This means that how well their content is delivered to the consumer is key. OTT applications can be greedy for device and network resources and bandwidth so there is real risk to subscriber Quality of Experience (QoE) as user congestion increases. A classic example of demanding bandwidth-heavy activities includes video consumption. For example, when the popular IM application Snapchat introduced its HD video chat, the bandwidth usage of the app soared. Within two weeks, Snapchat jumped to the top 15 applications based on bandwidth usage.
For operators, WhatsApp's move could break the voice revenue paradigm. The mobile data revolution is taking off and operators around the globe are transforming themselves from connectivity pipes into digital experience service providers. To do so, they need to increasingly leverage popular apps and content – such as video, music, cloud storage and social media – to create new personalized service plans based on the way subscribers live, work and play.
However, to make the digital experience a reality and to get a handle on the challenges and opportunities OTT applications present, operators need to introduce value-based plans that make it possible to charge for the value of the service to the customer, and not just the speed. For example, operators can help content providers expand their pay-for-use business by bundling the OTT service together with smartphone acquisition, high-speed access, guaranteed QoE and unified billing in a premium package.
This trend toward application-centric plans is already well underway. According to Allot’s MobileTrends Charging Report H1, 2014, there has been measurable rise in creative ecosystem partnerships between service providers and content providers. In fact, 85% of operators are leveraging OTT apps. Why? On average, operators who offer application-centric plans show higher (average revenue per user) ARPU and lower churn.
Operators should view OTT content providers more as friend than foe and acknowledge them as genuine partners in their business plans. Both need to work together to increase subscription and customer loyalty to both the app and the network that delivers it. In the end, it benefits all three stakeholders:
1. Operators can attract subscribers and improve ARPU;
2. OTTs can gain more “sticky” mobile users; and
3. Subscribers can enjoy a better user experience with their favorite apps.