Current challenges in the Telecom industry
Majority of Telecom companies are re-evaluating delivery of their services to consumers in keeping up with competition. This is a turbulent and dynamic time for the industry Providers are forced to consider new balances for creation of long lasting revenue streams. They should come up with innovative solutions while providing users with essential services.
To keep the boat afloat, providers should adapt. If they invest and develop suitable solutions that simultaneously answer consumer demand and support tech innovation, they will broaden their user base and open themselves up to new sources of revenue. In case they fall behind or fail to adapt, their existence is under threat by new, smaller and innovative but yet rapidly growing companies. In a dynamic and competitive industry this leads to a big shake up, the following challenges are in the range of high threats to the sector’s longevity?
The OTT services competition
The substantial growth of apps for mobile messaging in the last few years has become a serious threat to telecom provider revenue. An estimated 2.5 billion people around the world are now using at least one messaging app, which is driving away valuable traffic for text services of the providers. This is leading to an obvious decline in the Average Revenue Per User (ARPU) of provider, in turn caused it to dip from 34.58% in 2007 to 22.11% in 2015. This trend can ultimately lead to text messaging to fade out completely as OTT service providers further continue to siphon away valuable revenue from providers. Voice services provided by these messaging apps make this competition much more significant.
Gearing up for the IoT
There is a prediction of 21 billion connected devices by 2020. This is a result of IoT integration in our daily lives, To sustain these numbers, experts predict the need for platforms which support incredibly high levels of connectivity. This puts pressure on providers for developing converged platform which is sufficiently functional to support the full weight of the IoT. The integration of technology companies with telco services to form the IoT could also result in a hugely compressed telco infrastructure.
Decrease in voice revenue
Internet messaging and VoIP are changing the way people communicate in the the communications industry : where voice and text used to dominate, now. Smartphone traffic is transforming to WiFi, up from a total of 59% of smartphone traffic in 2011 to 81% in 2013. As a result, voice traffic has reduced from 50% in 2009 to 41% in 2014, resulting in a decrease in voice revenue of 2.7% by 2014. Voice revenue was previously the largest source of income for telcos, and hence the decrease in voice revenue has led to an overall decline in ARPU. Providers are forced to find additional source of revenues to replace voice and text – such as network level Value Added Services.
Developing 5G
The new network 5G is expected to become available to the public by 2020. It is expected to improve the capacity and latency in addition to speed of the spectrum. Hence, 5G can provide rich browsing experience with a very little delay and multiple/unlimited connections. 5G is expected to have a potential to facilitate the development of IoT, in other words 5G is not only an upgrade, but anticipated as a complete revolution of mobile technology. The other industry sectors and companies who can profit from 5G – would be technology giants such as Apple, who are currently investing in 5G to support their smartphones, and IoT companies in need of a platform from which they can launch their products. Hence the presence of other sectors puts Telecom industry under pressure for developing 5G technology prior to being shut out of the process altogether.
One such example would be Peugeot Instinct. In Mobile World Congress this year, instances of telecommunication services and device providers, partnering with car manufacturers, for production of concept products and showcased the reach of 5G within new sectors. This is a great step.
Solution
Mobile phone industry operators have realized that OTT(Over the Top operator-Netflix Hulu etc) can be good revenue proposition if the right cards are played at the right time. Telecom industry can greatly benefit by providing their offering just like the OTT way.This can be done either by buying or partnering with OTT companies. After entering into the mobile arena, Telecom operators can have a strong footprint in the market by providing a strong, consistent and openly interoperable messaging service to its established and robust customer base in a cost effective manner.
Once a Telecom operator can builds their own OTT app with help of OTT solution provider, revenue can be stream lined in the following ways:
Results
Increase in Revenue Stream
Smart Phone operators can increase their revenue potential by enabling their OTT services which can supplement their existing revenues as they have a strong existing customer base. A study by Telecom Asia says that 16 percent of the carriers believe in increased revenue by adopting this path.
High customer retentions
Operators can upraise their loyalty towards customers through their own OTT apps.This can be bundled and thrown into either anew voice or data package. This leads in creation of an alluring point of differentiation for customers
Better marketability
Increase in the number of new features can lead to better marketability of the product This gives mobile interface a new look and when this application is provided in multiple versions (with improved features in higher versions like a voice message to text in a premium subscription) provides a better marketability for the carrier, the device and the retailer resulting in a win situation for all.
Offering wider features in smartphones
Chat based games, mobile learning, smart ads and promotions enrich these core products and offerings to customers entail an appeal to the same phone provided by a carrier with a lot of features versus the other provider with less on no features to the same instrument.
More customizable interfaces for customers
Developing own interfaces s gives complete control on the application for the provider. Partnerships do not give compete freedom to the. Providers as they also come under regulations which further complicates the customization process
Growth in joint ventures with peer and small providers:
OTT apps can attract and build strong relationship with other subscribers.This can generate a strong revenue through customer base. Music Library providers such a real player have associations with music companies which when embedded in OTT apps can result in having an indirect relationship with companies wanting release clips of their latest videos
Advantage of Building with OTT solution Providers:
Providers have three options to assess their OTT service strategies
- Build own OTT app through customization with help of solution providers
- Buy ready and developed system
- Partnering with existing OTT players
Among the above options, the last two (partnering and buying) tend to not provide a lot of freedom for the owner. The former method of partnering needs a shared agreement and profit and revenue sharing depends on the vision of the owner and ability of the solution provider. The latter part of customization has a domain limitation on the offerings and a reduction in the novelty part.
Building your own with OTT providers likes us gives you innovation and ability to design your apps online through our design studio. Our designers help you in transformation of ideas into sensible Mobile applications for both Android and IOS platforms. The process is very structured with the help of our Project management team bringing in the required resources at every stage during the development of project. We have led many of our startup and established customers through this wonderful journey of reaching their goals