COAI Builds a Case for Regulatory Neutrality
Growth of OTT is impacting the traditional revenue stream of TSPs, the imbalance needs to be corrected. Implement same service, same rules says COAI
The growth of OTT communication services is impacting the traditional revenue streams of the TSPs. The growth in data revenues is insufficient to address this erosion. According to COAI, going forward, with the increasing penetration of smartphones, this trend will only accelerate, thus further adversely impacting the financial viability and business sustainability of the TSPs. The implication of the revenue will be largely due to substitution of voice and messaging service.
Messaging Substitution
Instant messaging services and other social networking tools are affecting SMS revenues, and SMS is becoming less important for many consumers. In comparison to SMS traffic, which is likely to witness limited growth, OTT is expected to grow rapidly to 20.2 trillion messages. The success of the standalone messaging app is remarkable due to one simple factor: it is ‘free’. The attraction of such services is bound to grow as integration improves.
As mobile Internet is steadily growing as a key revenue generator, SMS is slowly declining as a significant revenue opportunity. According to research firm Ovum, the Indian telecom industry lost close to $781 million in 2012 in SMS revenues due to the emergence of social messaging apps and OTT. Indian telecom operators may lose $3.1 billion in SMS revenues by 2016.
Voice Substitution
Voice revenues are expected to suffer because of VoIP-based OTT offerings. Several OTT players have already had an impact on mobile VoIP growth and on the total voice market.
In India, 81.9% of revenues are generated by voice. So far, the impact of the stand-alone ‘free’ voice apps has been limited due to poor convenience and poor integration into the rest of the communications platform; within the next 2-4 years both would improve. Adoption will be further spurred by improvements in network quality that will support the user experience of these services.
Data revenues do not compensate for fall in revenues from OTT services.