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OTT messaging providers: friend or foe?

Published: 2013-01-09

Insight

For the past couple of years, the industry has witnessed the increasing popularity and usage of over-the-top (OTT) messaging applications, such as KakaoTalk, LINE, QQ and WhatsApp that offer a cheaper, if not free, alternative to standard mobile messaging. The popularity of these mobile applications posts a threat to mobile operators, as users shift from using traditional messaging services (SMS and MMS) to IP communication platforms. This change in consumer behaviour is expected to further exacerbate mobile operators’ already declining core revenues (for voice and SMS).

To address this issue, mobile operators have experimented with different strategies to curb the disruptive impact of OTT messaging players. For this article, three prevailing mobile operator strategies are reviewed and evaluated to determine which promise the most effective and long-term solution for mobile operators. The discussion focuses on specific advanced markets such as Japan, the Netherlands and South Korea, where this phenomenon is strongly observed.

A majority of these applications are also free to download and consume little data (approximately less than 15 KB per messages sent over IP networks), which make them very appealing to users who want to trim down their mobile budgets. Being a cheaper alternative has allowed OTT messaging providers to create a significant user base, especially among budget and young adult users.

Background

Mobile operators line of defence: 1-2-3 punch?

Outlook – What to expect next from mobile operators?

Published: 2013-01-09



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