analysys mason presentation: why do operators partner with ott voice providers?
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RefNo | Commercial in confidence
Why do mobile operators partner with
OTT voice providers?
OTT Voice Forum
6 October 2014 • Stela Bokun
RefNo | Commercial in confidence
Introduction: In 2005, this was operators’ nightmare scenario
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Source: http://www.economist.com/node/4401594
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Introduction: In 2014, the telephony business is alive, but the threat from OTTs still exists
Skype: 300 million active monthly users, more than a billion sign-
ups
Viber: more than 200 million active users
WhatsApp: 400 million active monthly users; is adding a calling
functionality
Facebook (now owner of WhatsApp): more than 1.4 billion active
monthly users
Kakao Talk: more than 100 million registered users
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Sources: Analysys Mason, WhatsApp, Facebook, Viber
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Introduction: Meanwhile, the industry is still asking the same question
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Source: http://www.trefor.net/2014/05/09/will-ott-voip-apps-
destroy-the-telecoms-industry/
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Strategy Examples
Block OTT services EITC (du), Etisalat
Orange, T-Mobile
Stimulate usage Orange, SingTel
T-Mobile, Telefónica, Vodafone
Partner with OTT players 3 Hong Kong, DiGi (Malaysia)
Etisalat, Globe Telecom, Nawras
Mobily, Telkomsel, Verizon
Launch IMS-based services MetroPCS, Orange, SK Telecom
T-Mobile, Telefónica, Vodafone
Launch ‘telco OTT’ services Bouygues, LG Uplus, Orange
Rogers Wireless, T-Mobile
Tele2, Telefónica
Operators’ response: Operators are responding to OTT with different approaches
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Why partner: Operators may partner with OTT players for many reasons
1. It is a proactive way of engaging with new models for
voice services
2. It may drive data usage
3. It may help with customer acquisition/retention
4. It may work as a temporary solution
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Reason 1: If VoIP matches the success of messaging, the threat is grave for operators
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Users of non-operator OTT voice
on smartphones
SMS traffic on mobile handsets
and global SMS retail revenue
Source: Analysys Mason, 2014
0
15
30
45
60
75
90
0
5
10
15
20
25
30
2010 2011 2012 2013 2014
Re
tail
reve
nu
e f
rom
SM
S
Me
ssa
ge
s
OTT IP Messaging
SMS
Retail revenue from SMS
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2013 2014 2015 2016 2017 2018
Use
rs
Middle East and Africa Asia-Pacific
Latin America North America
Europe
RefNo | Commercial in confidence
Reason 1: Blocking and emulation have not been particularly effective
Generally seen as a negative
strategy
Can result in increasing churn as
customers demand IP based
services
Declining numbers of operators
that opt for this in the last 2 years
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Few prominent attempts (TU Go,
One Number, Libon, YiChat)
Often tentative and ad hoc
initiatives, and not far-reaching
Blocking Emulation
VoLTE and RCS
May be too late and/or too little Stimulate usage
Limited time to act “Slow-motion machine” – David
Artunedo Guillen, TU Core Chief
Architect, Telefonica
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Reason 2: May increase data usage and smartphone penetration Effective in emerging markets
Effective with market challengers
Serves to educate people on the
usefulness of data plans
Serves to move users from
featurephones to smartphones
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* Between May and July 2014, Analysys Mason interviewed 14 operators
and five OTT providers to understand the drivers and strategies for
developing partnerships
“There are two parts to our OTT strategy,
drive data use and attract subscribers.”
MNO in an Asia–Pacific emerging market
Examples of operators who
partnered with Viber in 2013
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Reason 3: May improve or stabilise churn rates Effective differentiation strategy
in developed markets
Can help with customer
acquisition/retention
Can be particularly effective if
part of a larger strategic effort
(bundling, smartphone
penetration)
Does not need to cannibalise
voice revenue
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Sources: http://gigazine.net/news/20101018_kddi_skype/;
http://vinko.com/blog/2010/10/18/skype-calls-kddi-japan
Skype and KDDI entered into a
partnership in 2010 and
stemmed the ‘leakage’ of high-
end subscribers from KDDI
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Reason 4: Doing nothing while waiting for VoLTE and RCS can be too risky
Delayed launches – only 10
commercial launches so far
Hong Kong, Japan, Singapore,
South Korea and the USA
Issues with LTE coverage (and
the support for VoLTE outside of
the coverage area)
Limited international roaming
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Delayed launches - RCS has
been launched by 20 operators in
14 countries
Limited device support
Apple was not supporting RCS
Limited feature set
Limited interoperability
VoLTE RCS
Source: Global mobile Suppliers Association, Evolution to
LTE report, September 2014
A year ago, joyn (T-Mobile and Vodafone) was used
by around 4% of the customers and the mean daily
usage was 0.7 minutes. (Source: Nielsen and
Analysys Mason, 2013)
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Final thought: One size does not fit all
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Penetration of VoIP services*
*n=1447
Source: Analysys Mason and Nielsen, 2014
0%
10%
20%
30%
40%
50%
% o
f su
bscrib
ers
th
at u
se
Vo
IP
Different combinations of strategies may work differently for different
operators in different markets. Partnership is an option worth trying
RefNo | Commercial in confidence
Contact details
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Stela Bokun
Manager, Custom Research