While some mobile operators are deepening their ties with over-the-top providers like Skype and WhatsApp, many want to fight back by offering a superior OTT experience of their own, leveraging advantages like carrier billing and their networks’ location awareness. Many behaved in the well-established telco way and put their trust in big industry-wide platforms to deliver the ‘Skype killer’ ‘ in particular, the RCS (Rich Communications Services) specifications. These held out the promise of enhancing traditional cellco moneyspinners like voice and messaging, and outdoing the OTT brigade with capabilities like instant video call connections from every handset.
But like most broad platform developments involving a whole range of operators, RCS has progressed slowly. There have been roll-outs of selected messaging services based on the latest generation of the platform, in the US, Korea and Europe. But these have hardly shifted the market. The early applications will not keep WhatsApp up at night; only a very few countries have more than one operator with RCS live, so there is no roaming; and many of the main consumer benefits of the technology will require it to be embedded in nearly every handset, which is a long way off. Meanwhile, the OTT specialists are enhancing their own offerings rapidly and attracting new users every day ‘ users who, if they find the messaging app simple to use and widely adopted by their friends, will see little reason to move to a carrier alternative unless it has significant advantages.
No wonder, then, that operators are looking for alternative ways to launch their own OTT services more quickly. In August, a survey showed that most cellcos thought RCS, and its GSMA-backed brand name Joyn, had come too late. Only 7% of 40 global mobile operators surveyed by Tyntec and Mobile Squared in the summer answered ‘yes’ to the question ‘do you believe Joyn will be the solution that mobile operators are waiting for to tackle the threat posed by OTT players?’ A further 29% said ‘yes, but it has taken too long to launch’, while another 29% said it was too late for Joyn to make an impact. Jose Garcia, VP of sales and carrier relations at Tyntec, commented: “The usage will not be what operators expected and monetization will be very difficult’. (Of course Tyntec is not impartial in the debate, since its business relies on creating bridges between cellcos and OTT).
Even some that have launched RCS services are also pursuing their own developments and brand names ‘ Orange announced RCS apps in France, but also has its own OTT offering called Libon; AT&T and other US firms are to follow MetroPCS’s lead in launching RCS messaging along with Voice over LTE, in order to provide a unified communications play, but they may not use the Joyn brand.
Vendors know that, if they can be the ones to help the operators compete successfully in the OTT world, they will gain significant new power and revenue. Alcatel-Lucent has been active in this area, though its moves have not always been successful ‘ it pulled back from providing its own API (application programming interface) platform, for instance, recognizing that its operator customers wanted that control themselves. The carriers are becoming sceptical of major initiatives, whether led by suppliers or industry bodies, which involve creating huge common apps platforms. Too many times, these grand plans have foundered on conflicts of interest, politics and bureaucracy, as seen in LiMO and WAC (Wholesale Application Community).
Instead, they want tools to help them respond as quickly as their OTT rivals in developing and launching innovative new offerings. Some, like SK Telecom of Korea, have invested heavily in their own OTT brands and developer platforms. Others are looking to the speed and lower cost of a white label offering. Genband recently made a bold move in this direction when it acquired Israel-based fring for a reported $50m. It will use the technology to help fixed and mobile carriers to devise OTT voice and messaging applications, but is particularly targeting it at its fixed line customers, since they are less concerned about cannibalizing their existing mobile messaging revenues. Instead, they can see OTT services as a way to claim a role in the mobile experience by providing their apps across all networks including Wi-Fi.
Fring is best known for offering VoIP services to iPhone users, but last year it also moved into white label services for carriers. Thus it brings its new owner something far broader than an OTT app ‘ the opportunity to replicate Genband’s unified communications services for enterprises in the consumer market. Carriers will be able to use, white label and customize fring’s text, voice and video chat platforms.
An important differentiator that a carrier’s own OTT service can offer over Viber, WhatsApp and the rest is tight integration with existing mobile voice and messaging, so that customers can use the same address book and phone numbers. Some of Genband’s existing technologies, combined with fring, could help here ‘ for instance, it sells a product called Spider which negotiates communication sessions between different media, allowing a talk session to switch seamlessly between a VoLTE call and a fring call, perhaps, or translating a fring message into WhatsApp or SMS.
Genband CEO David Walsh said: ‘Fring is one of the pioneers that helped change the way consumers communicate on-the-go and is perfectly aligned with our strategy to bring service providers rich, simple-to-use, mobile communications solutions.’ Walsh believes carriers will look back and see that ignoring OTT players was one of their most critical errors. ‘They were just hoping all of these over-the-top companies would just go away,’ he told GigaOM,but now WhatsApp has over 300m active users and Skype handled 167bn minutes of international VoIP traffic last year.
The first customer to go public on a deal with fring after the Genband acquisition was Bouygues Telecom of France, which will use the fring system to provide its customers with free calls and texts over Wi-Fi when abroad, to cut out roaming costs.
Other players are trying to help carriers achieve ‘telco OTT’ while remaining loyal to RCS. Kineto Wireless, for instance, offers Smart Comms, a suite of apps for cellcos which makes all kinds of communications ‘ voice, VoIP, SMS, instant messaging, video chat or image sharing ‘ accessible from a single interface. This can also be branded by operators and integrated with their overall offering. However, the more the carriers go their own way on OTT, and start to divorce their communications services from their networks, the more RCS/Joyn will appear to be just another layer of complexity in a world where players need to move very nimbly.
In an ideal world, Joyn would be widely adopted, delivering the kind of seamless interoperability and roaming between RCS services that was finally achieved in voice and SMS. Many carriers are at least keeping a watching brief on it, and some will make their own OTT apps compatible with it over time. But they cannot afford to place all their bets on a platform which is so slow to respond and change with consumer behavior. So we see players like Orange hedging its bets ‘ Libon was created separately from the cellco’s Joyn efforts but RCS is now baked into it and the two developmente teams have been combined. And Libon itself can cover several bases in business model terms. It can be a simple OTT app to extend Orange’s brand ‘ and maybe some revenues in future for value-added options ‘ across other networks as well as fending off Skype on its own; it can also be tightly integrated into an operator’s services to support a specific business model. For example, Orange’s low cost French brand, Sosh, allows its users to select a cheap tariff which gives them free international calls, through the Libon app, and this is also being adopted by Orange subsidiaries in Poland, Romania, Slovakia, Belgium, Tunisia and Egypt this year. This approach could also lead to Libon being marketed to non-Orange operators, at which point it would effectively be an alternative to Joyn ‘ even if, for now, Orange insists the aim is to get Libon out to its operating companies quickly and move them to Joyn later.
Giles Corbett, head of Libon, said in a recent interview: ‘We have now decided that Libon is open for business to work with other friendly operators. We’re in discussions with operators in Asia and the Middle East to help them roll out Sosh-like offerings and also with a view to later move to Joyn. Through this telco integration, Libon is actually big business for Orange. It may well be, if Joyn succeeds and takes off everywhere, that Libon becomes a front end for Joyn. In countries where Joyn fails to take off, Libon provides services in its own right.’
Like so many carrier initiatives before, Joyn is suffering from the fact that communal standards efforts move slowly and fractiously, and that most tier one operators would rather create something they can control, and even establish as a de facto standard itself. ‘Joyn needs deep integration, and something like WhatsApp is moving very quickly,’ a Telefonica spokesperson said recently. ‘We support Joyn but we can see how fast the market is moving.’
Many operators have been launching OTT services and even marketing them actively on rivals’ networks or in countries where they do not have their own infrastructure. Telefonica, Telstra, SK Telecom and others even have dedicated divisions for digital offerings, on the basis they can behave more like start-ups or OTT firms, and distance themselves from the more traditional concerns of the networking operations. One of the features of this new way of working is to be able to launch new applications rapidly, without all the testing and processes which accompany a network-based roll-out ‘ and also to kill those which do not work, start-up style.
For instance, Telefonica Digital recently shut down its Tu Me offering, which supported free calls and messaging in a similar way to Libon, T-Mobile USA’s Bobsled and of course Skype. That may just have been a recognition that Tu Me could not take on the likes of Skye, but it also reflects the conflicts of interest with traditional voice and SMS revenues, which still exist even for the progressive web-focused companies like Telefonica. That is highlighted in the fact that the Spanish group has held onto Tu Go, which it launched earlier this year on its O2 UK network. Tu Go, unlike Tu Me, does not eat into the core O2 services, but extends them to other platforms. For instance, a user can make a voice call from a desktop PC but see the cost taken out of their monthly mobile allowance, or can receive calls, made to the mobile number, on a PC or tablet.
This is what carriers need to do, whether or not they adopt RCS, Joyn or their own solutions. They need to forget about magicking the app out of the hat which is so good that users come rushing away from Skype. Instead, they need to focus on areas of the consumer experience which they control and the OTT specialists cannot, most notably the phone number and address book, and the billing arrangement. This may sound prosaic compared to creating a massive new cross-industry platform, but consumers are prosaic ‘ they want services that are cheap, simple and useful, and as the experience of app stores has shown, being able to put a wide range of activities on a single carrier bill is a significant plus in these respects.