Carrier OTT services trump pricing innovations - Mobile World Congress 2011 Scorecard

Whose profile is rising? Carrier OTT services

Wireless carriers at the Mobile World Congress trade show voiced deep concerns about how over-the-top (OTT) players are cutting into their core businesses, and how they need to innovate more quickly to compete. "When somebody watches YouTube on a mobile phone and ends up [with a] big bill, he curses under his breath at the telecom operators," Sunil Bharti Mittal, CEO of Indian carrier Bharti Airtel, said during a keynote address, according to CNET.

A number of other operators offered similar assessments. OTT "imposes a big burden on mobile operators," said the CEO of Telecom Italia, Franco Bernabe. And AT&T Mobility's (NYSE:T) John Donovan said the carrier is considering a way to let OTT players like Netflix pay for the data traffic costs generated by their streaming services, according to the Wall Street Journal. 

It's no real surprise that operators are worrying over OTT pressure. Ovum estimated mobile operators lost $13.9 billion of potential SMS revenues in 2011 due to IP-based messaging apps like WhatsApp, Facebook Messenger, Apple's iMessage and other such offerings that run "over the top" of carriers existing messaging infrastructure.

So what to do?

"Telecom operators need to go on the attack," said Dean Bubley, founder of Disruptive Analysis and author of a report on the topic. "They must exploit the scale and ‘viral' adoption of new services by billions of Internet and smartphone users, using similar tactics to the familiar Web- or VoIP-type providers. It is no longer enough to rely on slow-moving standards or cumbersome collaborations. Telcos need to act alone, or with specialist technology partners".

And it seems some operators are taking heed of this advice. In a GigaOM post, Chetan Sharma Consulting's Chetan Sharma pointed to Orange's "ON Voicefeed" visual voicemail service and Telefonica's BlueVia messaging APIs as examples of carriers breaking the mold and responding to OTT threats.

U.S. operators are getting into the act too: T-Mobile USA's Bobsled VoIP calling service, AT&T Mobility's Android messaging app and its international calling app are all examples of carriers heading over the top.

Are more in the pipeline? "Verizon Wireless could extend its exclusive Droid brand into Droid Messaging, offering rich features like read-receipt, video calling, or push-to-talk on every Droid-to-Droid call or text," theorized Jason Devitt, CEO and co-founder of Mr. Number, in a recent TMCnet article.

Not surprisingly, vendors are responding. For example, Kineto Wireless during the MWC show announced its new Smart VoIP, "the first VoIP application specifically developed to enable mobile operators to leverage their existing network infrastructure to offer a competitive over-the-top (OTT) voice service," the company said. (Ironically, the offering is virtually identical to a product Kineto launched in 2009. The difference now? "People are starting to ask about it," said Kineto's Steve Shaw.)

Whose profile is falling? Carrier pricing innovations

Although there was lots of talk at the Mobile World Congress show about how operators could explore new pricing paradigms for wireless services, including for data services, there was little in the way of action on the topic.

Both equipment and billing vendors have long discussed the possibility of carriers implementing new and innovative pricing scenarios, including pricing for specific data sessions or pricing based on services users access, but none of those strategies got much interest among operators during the show.

In the United States, pricing remains stuck at the MB and GB level. While operators continue to theorize on the possibility of offering free access to Facebook, for example, most users remain stuck paying for bits and bytes without any real understanding of how their phones are using the network.

Indeed, perhaps the only real news on the topic came from Verizon Wireless (NYSE:VZ), which expects to offer data plans that can be shared among multiple devices by the middle of the year. However, the news--based on comments made by Verizon Communications CFO Fran Shammo--did not come out of MWC but instead an investor conference in the United States.

Verizon, of course, isn't the only the carrier hinting at family plans; executives from AT&T Mobility (NYSE:T) and Sprint Nextel (NYSE:S) have hinted at such plans as well.

Nonetheless, innovation around service pricing remained a noisy topic at Mobile World Congress--but one that hasn't received much in the way of concrete action.

Carrier OTT services trump pricing innovations - Mobile World Congress 2011 Scorecard