BARCELONA, Spain--Wireless operators for years have been worrying about over-the-top service providers. Indeed, OTT services are the main reason that wireless carriers in the United States and elsewhere launched unlimited calling and texting pricing plans--they were a way to remove the leverage that services like iMessage, WhatsApp and Facebook Messenger had over users. Why shift your communications to WhatsApp when your wireless carrier already offers unlimited calling and text messaging?
But a handful of recent announcements points to a future where OTT companies offer not only calling and messaging services but full-blown social networks, replete with movies, games and even banking services. Moreover, some OTT players are now moving into the last stronghold of wireless carriers--access itself.
First, let's look at the world's existing OTT companies. WhatsApp, which Facebook (NASDAQ:FB) values at a whopping $19 billion in total, announced plans to offer voice calling sometime in the second quarter. Although wireless carriers still can make revenues through the sale of WhatsApp's bits and bytes after the company launches voice calling services, the move could widen the gap between users and wireless carriers if users place their calls through WhatsApp rather than a wireless carrier. After all, if WhatsApp is the company issuing your main phone number, wouldn't you consider yourself primarily a WhatsApp customer? (To be clear, WhatsApp announced only that it would provide a cheap and simple calling service in the second quarter, and did not release details on exactly how that service will work, including whether it will issue its own phone numbers.)
But WhatsApp isn't the only OTT company pushing the boundaries in this space. KakaoTalk in South Korea already offers texting and calling services, but has expanded dramatically beyond that to offer its own games as well as access to books, movies and music. Moreover, Kakao is working with local financial institutions to launch banking services, including person-to-person payments. Not surprisingly, South Korean wireless operators are working with Kakao to offer Kakao-specific billing plans.
These types of services will continue to push wireless carriers out of the services, like calling and texting, that they have traditionally provided to consumers.
But, perhaps more importantly, there are a small but growing number of OTT players that are treading onto data access, the last service in which wireless carriers still remain relevant.
For example, Opera Software late last week announced its new "Sponsored Web Pass" product, which is for sale to wireless operators and will allow advertisers to pay for the cost of users' Internet access. Opera's Sponsored Web Pass is similar to AT&T Mobility's (NYSE:T) plans to launch a Sponsored Data service for advertisers, and will allow Opera's operator customers to offer similar plans.
The final element here is Netflix's recent disclosure that it inked an interconnection agreement with Comcast. The deal allows Netflix to stream its content directly to Comcast subscribers and avoid the third-party technology providers that other web services use. Aside from the net neutrality concerns this announcement raises, it also reflects the desire of OTT players to do anything they can to remove the obstacles between their services and their users.
If Netflix is willing to pay an interconnection fee, what other companies will likely follow its lead? And how will these payments from OTT companies affect the relationship between wireless users and their wireless carrier? --Mike | +MikeDano | @mikeddano