Over the top apps are a perennial issue for access providers, most immediately because some OTT apps are direct or indirect competitors to the carrier services that drive revenue and profit for the telecom service provider industry.
By this point it is clear to all that OTT voice represents a major form of product substitution for carrier voice, and the same is happening to text messaging, conferencing and content services.
That encouraged some tier-one service providers to try and compete, head to head, with OTT app providers. So far, OTT success has been very rare in the broader telecom business, in that regard.
So many service providers either do not try and compete with OTT services, or in some cases try and partner. And though not all would agree, some argue that OTTs, in the larger scope of things, are not direct competitors.
“As OTT players put increasing pressure on traditional telco profit centers, it is tempting to see them as direct competitors,” Vision Mobile says. “Yet, OTTs do not compete for telco service revenues; instead, they compete to control key links in the digital value chain, with business models that span consumer electronics, online advertising, software licensing, e-commerce and more.”
That might not strictly be true: in a growing number of cases, app providers do compete for telco service revenues.
Still, not many service provider execs would agree that “OTTs do not compete for telco service revenues.” OTTs offer product alternatives, so in that sense, competition might not be direct. It hardly matters, in terms of business impact.
OTT alternatives are disrupting carrier services.
But the larger point made by Vision Mobile arguably remains valid. App providers work mostly in different parts of the ecosystem.
Though competition generally exists in the content, distribution and access parts of the Internet ecosystem, between “telcos” and app providers, to some extent, partnerships and competiton remain viable options for some types of services.
It is easy to say telcos must “compete” with app providers. It is hard to do, and likely virtually impossible in consumer realms.
Better prospects arguably lie in any number of potential business areas, where it is easier to identify opportunities and arguably easier to create services. That is why connected car and industrial Internet of Things businesses have made sense to tier one service providers such as AT&T and Verizon.
It will make more sense for other app and device providers to pioneer consumer apps, in areas such as health and wellness, for example.
That is why app development will be such a big focus at the upcoming Spectrum Futures conference. Apps now are created mostly by third parties, so access providers mostly have to partner to create bundles of value featuring apps.
Here’s a fact sheet and Spectrum Futures schedule, illustrating the planned discussion of how and where ISPs and app providers can partner, as well as the business issues to be confronted.
Venture capitalists will explain what they are looking for, as well.