The impact of over-the-top service providers on the Global Mobile Telecom Industry: A quantified analysis and recommendations for recovery

Abstract

Telecom industry is significantly evolving all over the globe than ever. Mobile users’ number is increasing remarkably. Telecom operators are investing to get more users connected and to improve user experience, however, they are facing various challenges. Decrease of main revenue streams of voice calls, SMS (Short Message Service) and LDC (Long distance calls) with a significant increase in data traffic. In contrary, with free cost, OTT (Over the top) providers such as WhatsApp and Facebook communication services rendered over networks that built and owned by MNOs. Recently, OTT services gradually substituting the traditional MNOs` services and became ubiquitous with the help of the underlying data services provided by MNOs. The OTTs` services massive penetration into telecom industry is driving the MNOs to reconsider their strategies and revenue sources. Objective: The research objective is to critically evaluate the impact of OTT providers on MNOs. With the empirical evidences, the research explores a quantified impact of OTTs on MNOs main revenue streams, and breakdown this impact to highlight effect`s significance. Followed by a statistical trend analysis of global MNOs` revenue over the last decade. Additionally, the research aims to compile, evaluate, and analyze set of former proposed strategies for MNOs to overcome the OTTs` impact. Methods: Referring to available open source raw data collected from GSMA and official telecommunications regulatory authorities worldwide, the research develops a statistical model based on regression and extrapolation to analyze the global MNOs` revenue trend. Findings: This study reveals a hidden revenue loss for global telecommunications industry represented in all MNOs all over the world. The study corelates the hidden revenue loss to OTTs evolution. The study finds out that SMS is the most impacted traditional service of MNOs and predicted that it will vanish at quarter 4 of 2022. Recommendations: MNOs to apply 4 different strategies varying from competing to partnering with OTTs based on the services overlapping level and OTT size. MNOs need to target OPEX and CAPEX reductions and develop their own multi-functional customer-oriented OTT application.