Global Journal of Flexible Systems Management
https://doi.org/10.1007/s40171-019-00209-6
ORIGINAL RESEARCH
Impact of Over-the-Top (OTT) Services on the Telecom
Companies in the Era of Transformative Marketing
Muhammad Farooq1 • Valliappan Raju1
Received: 13 November 2018 / Accepted: 26 March 2019
Ó Global Institute of Flexible Systems Management 2019
Abstract Due to digitalization today, we are more con-
nected than ever before in human history. Access to the
Internet has increased from 16 million in 1995 to 4157
million users by the end of December 2017. The industry
which helped humanity connected and made the world a
global village is the telecommunication industry. However,
today the telecom companies are facing revenue losses; for
instance, revenue of value-added services of telecom
companies in Pakistan has reduced from Rs 5861 million in
2012 to 236 million by the end of 2017. Similarly, because
of WhatsApp, Skype and Messenger usage, the long-dis-
tance call and SMS revenue of telecom companies in
Pakistan have reduced from Rs 47,969 million in 2008 to
19,555 million at the end of 2017. With the empirical
evidence from Pakistan and the literature from all over the
world, this overview research paper summarizes the issues
of the telecom sector and suggests a way forward to help
the telecom companies to come out of this situation. For
review paper, official telecom regulatory reports and
GSMA reports have been referred. This study concluded
that, on the one hand, telecom company’s revenue is
decreasing and, on the other hand, it is bringing enormous
opportunities to the companies. Telecom companies can
get the benefit of changing customer preferences’ by
understanding customers’ requirements, producing and
selling Internet and digital value-added products and ser-
vices in parallel with traditional telephony services
& Muhammad Farooq
Farooq.buzdar2@gmail.com
Valliappan Raju
Valliappan.raju@limkokwing.edu.my
1
Limkokwing University of Creative Technology, Cyberjaya,
Malaysia
Keywords Customer preferences
Digitalization

Telecommunication
Transformative Marketing

Over the TOP (OTT)
Introduction and Background
Introduction to the Internet has transformed traditional
businesses; this transformation leads to the era of trans-
formation Marketing (Kumar 2018; Meyer 2018;
Varadarajan 2018). It has transformed different sectors. For
instance, publishing, advertising, music media are com-
pletely different today compared to a decade ago (Akamai
2013). The twenty-first century is the century of disruption.
In the last two decades, the changes the world has seen
were never witnessed in human history. Many changes
which the world has embarrassed made people life easy
(Farooq et al. 2018, 2019). Introduction of iTunes helped
people to listen to their desired customized songs without
buying the complete albums, and Airbnb is offering the
people the opportunity to leave the hotels and be guest of
someone in some other country or region. Although these
disruptions had a huge impact on disrupted industries, the
iTunes, YouTube and Uber did not use any platforms or
infrastructure of industries which they disrupted. In con-
trast, there is another sector which is in the process of
disruption because of digital evolution. This sector is the
telecommunication sector, over-the-top (OTT) services,
i.e., Skype, WhatsApp, IMO and Facebook are reaching the
customers directly using cellular companies-built infras-
tructure, without paying any regulatory or platform fees.
Because of global economies of scale, the OTT companies
are offering the freemium model. However, this is proving
the kiss of death for telecom traditional voice and
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messaging revenue (Regina 2017). The issue of how tele-
com companies can compete with OTT is in the debate
from the previous 10 years. Imposing regulations on tele-
com companies and giving free hands to the OTT to
operate for similar services also raise questions on regu-
latory authorization in multiple countries. Therefore, this
study is aimed to identify the ways how OTT is impacting
the telecom companies, why OTT services became so
popular and now and what are the possible options which
telecom companies and regulatory authorities have to
address the telecom concerns.
Problem Statement
Strategic flexibility of the manager plays an essential role
in the success of any firm (Shalender and Yadav 2019),
because of the flexibility of managers and telecommuni-
cation companies ability to embrace new technologies.
Telecoms are the companies which survived in every era
and reshaped its services due to its flexible systems and
management (Amin and Horowitz 2008; Sharma et al.
2010; Vidyarthi and Singh 2011; Khare 2014; Sharma et al.
2015; Sushil 2015, 2016; Agrawal et al. 2016; Gupta et al.
2018; Razzak et al. 2018). With the advancement of
technology, the telecom companies have successfully
updated their technology from 2G to 3G and 3G to 4G.
These technological developments lead to innovation and
competition between telecom companies at the service
level. However, the entrance of OTT has drastically
changed the dynamics of the telecom business in the last
10 years (Krüssel and Göbel 2019). Telecom companies
compete within their industry and outside the industry with
OTT services in parallel. For instance, in Pakistan, there
are four telecom companies. These companies have 154
million customers as of December 2018. The telecom
industry is already extremely saturated. Table 1 shows the
telecom subscribers of Pakistan from July 2018 to
December 2018. In 6 months, there was no substantial
increase in the subscriber base, as already every person has
a telecom connection. Gaining a new connection means
snatching customers from the competition. As shown in
Table 1 in September 2018, Zong and Ufone got 1% extra
market share, but at the same time, the two other compa-
nies Jazz and Telenor lost its 1% market share,
respectively.
An industry, which is facing cutthroat competition
inside, is also facing the demand for better-quality services

Table 1 Telecom within industry competition analysis. Source: (PTA 2019)

Category PMCL (Jazz) PTML (Ufone) CMPAK (Zong) Telenor Total Analysis

Total customers of a Company

Jul-18 55,597,047 20,499,075 31,021,206 43,436,455 150,553,783 Saturated market, extreme
Aug-18 56,006,446 20,616,112 31,166,960 43,300,407 151,089,925 competition between the
competitors
Sep-18 56,094,685 20,835,683 31,475,508 43,253,025 151,658,901
Oct-18 56,177,506 21,109,741 31,707,965 43,159,796 152,155,008
Nov-19 56,094,720 21,320,940 31,971,324 43,355,112 152,742,096
Dec-18 56,213,840 21,595,979 32,352,720 43,824,068 153,986,607
Date PMCL (Jazz) (%) Telenor (%) CMPAK (Zong) (%) PTML (Ufone) (%) Total (%)

Market share %
Jul-18 36.9 28.9 20.6 13.6 100.0 Gaining new subscribers means
Aug-18 37.1 28.7 20.6% 13.6 100.0 snatching the customers from
the competition
Sep-18 37.0 28.5 20.8 13.7 100.0
Oct-18 36.9 28.4 20.8 13.9 100.0
Nov-18 36.7 28.4 20.9 14.0 100.0
Dec-18 36.5 28.5 21.0 14.0 100.0
Change in market share
Jul-18
Aug-18 0.10 - 0.20 0.00 0.00 0.00
Sep-18 - 0.10 - 0.10 0.10 0.10 0.00
Oct-18 - 0.10 - 0.20 0.10 0.10 0.00
Nov-18 - 0.20 0.00 0.10 0.10 0.00
Dec-18 - 0.20 0.10 0.10 0.10 0.00

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Table 2 Analysis of two-sided problem which telecom companies are facing. (PTA 2019)
Customers demand high-speed Internet (network infrastructure from telecom) to use OTT services

2016–2017 2017–2018
Telecom subscribers 139,758 150,239
Telecom investments (Rs. millions) 67,568 78,966
Mobile data usage (Tbs) 690,345 1,258,843
Telecom revenue (Rs. million) 470,135 488,750
Telecom subscribers (% change) 7%
Telecom investments (Rs. millions) (% change) 17%
Mobile data usage (Tbs) (% change) 82%
Telecom revenue (Rs. million) (% change) 4%

because of increased Internet demand. To expand the
availability of its services, telecom companies have
invested 78,966 million PKR in 2017–2018 which is 24%
of 2018 total telecom revenues. Table 2 from the annual
report of Pakistan Telecommunication Authority (PTA)
December 2019 report shows the increase of 17% in
investment in 2017–2018 compared to 2016–2017. The
only area which has increased is the usage of the Internet,
which did result in more revenue for telecom companies.
The reason why there is no increase in the revenue of the
same percentage is OTT. Customers are buying the fixed
Internet plans and using OTT for communication which is
cannibalizing the voice and SMS revenue of telecom
companies (Figs. 1, 2).
The loss of telecom companies is not only limited to
voice call revenue. It has also disrupted the traditional VAS
and international calls revenue stream. For instance, in
Pakistan telecom, the VAS revenues of the telecom com-
panies have also decreased. VAS revenues include revenue
from SMS (short message service) or other services like
Ringback tone.
Before OTT dominance, the telecom companies’ one of
the significant streams of revenue was the (long distance
international) LDI call revenues. LDI revenues decreased
from 47,969 million in 2008–2009 to 19,555 at the end of
2017 (PTA 2019).
Related Literature: Global Perspective, How OTT
is Impacting Telecom Companies?
In global perspective, today in 2019, out of seven billion
people living in this world, four billion people are using the
Internet, which is 54% of the world population. Count of
Internet users has grown from 16 million to 4157 million
from 1995 to 2017 (World Internet Stats, 2018). The
increase in Internet utilization happens due to the extensive
infrastructure of telecom companies. Telecom companies
overall have spent in billion in making this infrastructure.
Besides this, as per country regulations, telecom compa-
nies have to buy the bandwidth and 3G, the 4G licensee.
OTT companies are using a model called ‘‘freemium.’’ As
per HBR ‘‘Over the past decade ‘Freemium—a combina-
tion of ‘free’’ and ‘‘premium’—has become the dominant
business model among Internet start-ups and smartphone
app developers. Users get basic features at no cost and can
access richer functionality for a subscription fee. If you
have networked on LinkedIn, shared files through

Fig. 1 Decline in telecom VAS Revenues of Cellular Companies (SMS, Small Non-Internet Features)
companies VAS revenue. 8,000
Source: (PTA 2019) 5,861 5,617
6,000 4,978

4,000 2,670 2,880

2,144
2,000 1,144
90 236
-
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Fig. 2 Decline in LDI revenue Cellular Companies Long Distance Revenue (LDI) in PKR.
of telecom companies. Source: 60,000 47,969 44,964 43,874 40,890
(PTA 2019) 34,195 32,675
38,572
32,554
40,000
19,555
20,000

-
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

123

Dropbox, watched TV shows through Hulu or searched for
a mate on Match, you have experienced the model first-
hand. It works for B2B companies as well—examples
include Box, Splunk and Yammer’’ These companies can
afford freemium because they are not paying for the
licensee or any regulatory price, bandwidth or any other
regulatory prices. However, at the same time, the OTT
services are using telecom companies built infrastructure
which was developed after paying bandwidth and regula-
tory fees (Erik 2014).
Academic Literature
Several studies have been conducted on the future of telecom
in the last 10 years (Nooren et al. 2012; Sujata et al. 2015;
Krüssel and Göbel 2019). Most of the studies discussed the
non-technical aspects for telecom companies; in this study,
the authors have included all studies which have discussed
the future in telecom in the context of OTT services. Ganuza
and Viecens (2014) gave one conceptual framework on the
OTT content impact on telecom companies. The research
covered the only content part and predicted that it would
increase the revenue of telecom companies. Sujata et al.
(2015) discussed the impact of OTT on telecom companies
in the Indian context and concluded that these changes in the
industry are happening because of customer preferences.
However, the authors also discussed the concerns which
Telcos has over OTT services. In 2019, Krüssel and Göbel
anticipated the future of telecom companies in the book
‘‘Future of telecom’’ in detail.
Krüssel and Göbel (2019) listed four types of players in
the telecommunication business. The first player is the net-
work operators; network operators are cellular companies.
The second type players are the resellers; these companies do
not have their own infrastructure or content, and they just
resell either the content or infrastructure. The third type of
players is the OTT sp; these are smaller OTT companies. The
last players are the OTT Ecosystem companies, for example,
Facebook and Google. The author is of the opinion that in the
future every player has different options. The first player
network operator can expand its existing services and pro-
vide services like OTT companies. It will reduce the bridge
between the company and end user which currently exists in
the market because of OTT. To survive, telecom companies’
infrastructure is important. OTTs need telecom companies’
infrastructure. Krüssel and Göbel (2019) are of the opinion
that reseller and OTT sp will disappear. The other big group
is OTT Ep. OTT can integrate their services and invest in
infrastructure. Companies can only focus on OTT and
expand their services further.
In 2019, after the introduction of 5G, the network
operators should pay more focus on the consumers. The
connection which OTT broke with the end consumer and
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Global Journal of Flexible Systems Management
telecom companies can be reestablished. The focus should
be on network optimization (Korzunowicz 2019). Similarly
Borowski and Khurana (2019) also said that the network is
still the king and it plays a role in enterprise architecture.
Companies just need to focus on agile methods and net-
work optimization. Besides network strength, the telecom
companies can play an important role in ecosystem after
the introduction of 5G, and it will be one of the prominent
areas where telecom companies can earn revenue (Heine-
mann et al. 2019). AI, machine learning and digitalization
will not be limited to start-ups; the result is an ecosystem,
which will connect all the aspects of life, telecom, health,
transportation and education. There will be 21 billion
connected machines in 2021. The world has just getting
connected (Lukowski et al. 2019; Weber et al. 2019).
Increased Internet speed and advanced technology made
the power important. In future, power is a critical aspect of
current technology for the network side companies that need
to manage the energy sources. The authors show low-power
wide area network as a game changer for the IoT. Eberhard
and Heuermann (2019) worked on regulatory possibilities.
The author provided the regulatory solutions on how com-
panies, the network operators, can compete with the OTT.
OTT has the biggest issue of connectivity. In this regard, there
is the possibility of open access of the Internet for broadband
deployment via a mobile wholesale network. In AI, B2B
companies will transform, and telecom companies can focus
on getting revenue from business consumers. Telecom com-
panies must be ready to accept the changes. Otherwise, they
remain like ‘‘bite pip.’’ In simple words, dump pipes will carry
the Internet. (Grineisen and Rehme 2019; Wisselink and
Schneider 2019; Hong and Dietze 2019; Krämer 2019).
Today in 2019, as Fig. 3 titled ‘‘Digitalization, World-
wide statistics’’ shows that four billion people are using the
Internet, three billion people are social media users, and
five billion are unique mobile users. Out of three billion
people, 2.9568 use social media on the Internet. All this has
become possible because of the infrastructure of telecom
companies (Nathan 2018).
These statistics were predicted in many reports before
the 2018 current situation. In the world, cellular revenue
forecasts reports said that the total SMS revenue of telecom
companies would fall from 120 billion in 2013 to 97 billion
in 2018 because of the increase in the usage of OTT ser-
vices. Cisco also predicted that smartphone data traffic
would rise at compound annual growth rate (CAGR) 61%.
CISCO report also predicted that usage of the Internet
would increase from 1.5 exabyte in 2013 to 15.9 exabyte in
2018. It was also explicitly mentioned in the report that this
growth would cause an increase in traffic and ultimately it
will increase pressure on the telecom service providers.
Telecom companies have to increase their capacity in
bandwidth, transport network, and radioactive network.
Global Journal of Flexible Systems Management
Fig. 3 Digitalization,
worldwide statistics. Source:
(Nathan 2018)
Total Population
Total Population
7.593 Billion
Urbanization
Penetration 53%
55%
Another report by Spirit DSO, ‘‘The Future of Voice’’
has also reported the impact of over-the-top services on the
voice over Internet protocol (VoIP) services revenue. The
report states that all over the world telecom revenues would
decline from 970 billion USD in 2012 to 800 billion in
2020. As a result, the report predicted that this increase in
usage of OTT would be lost around 479 USD loss of
revenue due to voice. On the one hand, in telecom com-
panies, the previous infrastructure was getting outdated,
and, on the other hand, to provide the Internet services and
handle traffic, telecom companies were supposed to invest
in the infrastructure.
One another report says that total OTT minutes will
reach up to 1.7 trillion by the end of 2018, and this count
will cause a loss of 63 billion USD to telecom companies.
The report also highlighted that demand for online text
(messages) application would also increase and these ser-
vices usage will also ultimately reduce revenue of telecom
short message service (SMS) earnings. All these develop-
ments will at the end of the day demand from telecom
companies to increase its infrastructure and invest in a
better experience.
Heavy Readings’ report ‘‘Internet TV, Over-the-Top
Video, and the Future of IPTV Services’’ highlighted the
issues in 2011 which telecom companies are facing today.
The report stated that this perception is found among
telecom executives that they might face competition from
OTT video service providers. The report also discussed
possible options which telecom companies could use to get
the benefit of upcoming developments. The possibilities
included bonding with OTT services providers and making
internet offers which can mutually benefit both telecom
companies and OTT service providers.
As stated in the Heavy Readings’ report that telecom
companies can benefit from this situation by creating a
product which is suitable for both companies. Although the
numbers of traditional voice minutes and revenue of
Active Social Media Active Mobile Social
Internet Users Unique Mobile Users
users Users
Active Social Unique Mobile Active Mobile
Internet Users
Media users Users Social Users
4.021 Billion
3.196 Billion 5.135Billions 2.958Billions
Penetration 42% Penetration 68% Penetration 39%
companies will decline, SMS usage of telecom companies
was also expected to decline, but the right point for telecom
companies was that the usage of OTT service was expected
to increase their Internet bundles usage, ultimately pro-
ducing the revenue for these companies. Companies could
have increased the revenue; for example, China’s mobile
Internet usage increased by 187%. The increase in OTT
usage automatically increased the usage of the Internet of
telecom companies.
Heavy Readings’ report is right. As the overall revenue
of the telecom sector in Pakistan has increased from 2008
onwards, companies’ revenue is increasing every year
despite the reduction in VAS and international calls rev-
enue. However, the overall revenue of the companies is
increasing. The increase is due to an increase in telecom
companies overall Internet sale. Figure 1 titled ‘‘Celluar
Company Revenue’’ shows the definite trend of revenue
from 2008 to 2017.
This situation is not only about having less proportion of
revenue or telecom companies letting OTT services to use
their infrastructure. Is it about the position of telecom
services? Where do they stand? Alternatively, telecom
companies are dumb pipes for OTT services? Should the
companies revamp themselves? We will try to explore the
reasons why all this happened, why customer preferences
changed and why telecom companies are left behind. There
are many gaps telecom companies should fulfill and
improve their services.
Findings and Recommendations
The Reason Why Customer Shifted to OTT
Telecom companies are in communication business for
many years with millions of subscriber base and vast
infrastructure. Despite all this, some smaller start-ups that
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started at home are causing them 400 billion annual loss.
Why did this happen? Just like the music industry, it was
trying to sell to the customers complete CD album despite
that the listeners liked only one song in the CD. Taxi ser-
vices were very annoyed. Taxi men were not updating them
themselves with changing technology; customers were
supposed to go to the taxi, bargain on fair or make sure that
the taxi man’s meter is OK. Customers were fed up of the
taxi services and music albums. Therefore, they endorsed
YouTube and Uber. Similarly, OTT messaging services, for
instance WhatsApp, became popular because of complex
and expensive short messaging service (SMS) by telecom
companies. For SMS confirmation there was one value-
added service with extra charges. Sharing videos and pic-
tures was difficult. The MMS service of telecom companies
was very expensive. Due to all these issues, customers were
looking for an option a long time ago. Table 2 explains in
detail the difference between SMS service offered by cel-
lular service providers versus the services of OTT compa-
nies which are providing all over the world.
The text messages of telecom companies had a limit of
160 characteristics. There were no group SMS options.
Customers were supposed to send SMS or talk to customers
individually. There was no system of talking to people in
one group or one window which was introduced by OTT
companies.
Before the introduction of OTT services, telecom com-
panies were selling these services with the name of value-
added services. Videos and audio calls services were not
available. Today all OTT services providers first do not
have any limitation on the count of messages or limit of the
text. Customers need Internet access. The OTT services
provided an option to make audio and video call. The
Facebook messenger has made things much more com-
fortable. For WhatsApp services, customers need a mobile
number. For the messenger even, the customer does not
need to have a mobile connection.
The credit for OTT services updated also goes to
smartphones. There was a storage capacity issue in the
SMS services. Customers were supposed to delete the
earlier services. Now using the WhatsApp and Facebook
messenger, Hangout, Telegram and all other OTT services,
there is no limit on sending pictures and videos. Customers
can save videos on their mobile phones. Companies like
Telegram also offer to store the data conversation and send
the files to someone or save on another cloud.
The OTT services have made the chat very interesting.
People can interact with each other in groups. There are
multiple studies conducted using the WhatsApp groups not
only in universities among students but also in the corpo-
rate sector. Today any smartphone user cannot imagine not
having a WhatsApp group. Communication is effortless.
Customers can interact with up to 150 people
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Global Journal of Flexible Systems Management
simultaneously in one group. WhatsApp groups are the
principal source to gather people for the protests, and it has
been evident from the interaction of the political parties in
Pakistan. It is also used for political purposes.
Compared to SMS services, the OTT services offer the
sharing of contacts and location to the subscribers. In apps
like WhatsApp, there is an option to share the current
location and even the live location for 1 h. These OTT
services contain many pictures, emoticons and stickers that
these made the communication very easy for the customers.
There are already many stickers and emoticons that in
many cases there is no need to write the messages. With the
help of just stickers and emotions, it is easy to talk to
someone. It is beneficial for the kids for communication. It
is also helpful for undedicated people. The emoticons and
stickers can also be useful for interaction among the people
where they have different languages.
Recording audio or video calls was once complicated.
Once recorded, the telecom companies demanded them to
transform into a specific format before sending. After
sending a text message, confirming the delivery status of
the message was very difficult. However, now in all OTT
services customers have to keep pressing one button. They
can take the pictures, record an audio or video and send it
to the desired person or desired group.
OTT companies are not limiting themselves to com-
munication. Now, these companies are also focusing on the
payment system or playing games. OTT company’s ser-
vices extension is leaving the only option for the compa-
nies to bond with them. Companies like Telegram are more
interested in privacy. So, they answer the privacy issue.
Customers can send end-to-end encrypted messages.
One another developed which OTT services provided is
the ability to use them in multiple systems. Facebook
messenger is the best example. It can be used simultane-
ously on the laptop and mobile. There is no limitation on
selecting the mobile or WhatsApp. Customers can use their
logins anywhere.
Similarly, now WhatsApp is also offering the same
feature. With QR code, customers can use WhatsApp on
the desktop. Table 3 compares the traditional telecom
services and OTT services in detail.
There can be many reasons why customer shifted from
traditional voice and SMS services of telecom companies
to OTT services. If we apply technology acceptance rea-
sons and do a cost–benefit analysis of the OTT versus
traditional telecom companies, then as per the technology
acceptance model is given by Davis (1989); here are two
reasons behind the technology acceptance model. Multiple
scholars also accepted these two components of technology
acceptance once Davis (1989) introduced these (Venkatesh
2000; Venkatesh et al. 2003; Venkatesh and Bala
2008; Pick et al. 2014). Technology acceptance model
Global Journal of Flexible Systems Management

Table 3 Telecom versus OTT services. Source: Author Self-Created

Category Telecom product OTT services (famous services)
Services SMS Telegram WhatsApp Facebook Messenger Hangouts

Text 4 4 4 4 4
Audio call 9 4 4 4 4
Video call 9 4 4 4 4
User stories/moments 9 4 4 4 4
Open source 9 4 9 9 9
Characters 160 No limit No limit No limit No limit
Group chat 9 4 4 4 4
Emoticons 9 4 4 4 4
Stickers 9 9 9 4 4
Photographs sharing 9 4 4 4 4
Videos sharing 9 4 4 4 4
Audio sharing 9 4 4 4 4
Location sharing 9 4 4 4 4
Contact 9 4 4 4 4
Walkie-talkie 9 4 4 4 4
Voice and video 9 9 9 4 9
Free mobile app download N/A 4 4 4 4

correctly applied on the adaption of the OTT services there
is perceived ease of use (Davis 1989) and ease of useful-
ness (Davis 1989) in using OTT services compared to
telecom services.
How Can Telecom Companies Get Out of This
Situation?
As discussed in the comparison section, it is evident that
OTT services are much advanced and widespread than
what telecom companies can offer today. Telecom com-
panies are offering affordable Internet bundles. Using
them customers are using OTT services. If telecom com-
panies continue this very soon, they will lose their voice
and message revenue completely. The only way in the era
of digitalization any company has is to understand the
customer preferences and transform its services accord-
ingly (Farooq and Jabbar 2014; Buzdar et al. 2016).
Telecom companies can review customer preferences
trend and deal with OTT services accordingly. With the
current situation, telecom companies cannot continue. If
we continue in the coming years, these companies will be
only dumb Internet pipes. Telecom companies can also be
focusing on customer usage trends and help companies in
marketing strategies. Data are a tremendous asset which
telecom companies have. Here are the options which
telecom companies have today to deal with the OTT
services.
Blocking the OTT Services
Telecom companies can block the OTT service providers
for a short period and ask for the companies for market
share. In the USA and Europe, there is one law called
neutrality law. As per naturality law, companies cannot ban
Internet content or services providers. They cannot even
slow the speed of the services. In a country, like Pakistan
where neutrality law does not apply, companies can try this
tactic, but from this tactical fear of losing is very high. The
customers are used to with these services. There are
already many services. For telecom companies, it is chal-
lenging to control the OTT service providers. Also, it will
affect the revenues of the companies as customers mainly
use the OTT services after purchasing Internet bundle from
a telecom company.
While previously, disputes between the European Union
(EU) member countries, e.g., Spain and France, led to
blocking of OTT services. In the EU when OTT services
started providing services like voice call services of tele-
com companies. The countries gave the justification of
blocking services that OTT services were acting like tele-
com companies if so, the companies should also pay the
regulation fee and fulfill all the responsibilities like telecom
companies. The very nature of IP communications means
that the VoIP connections are often location independent,
and reliance on a functional electricity supply makes them
inferior in some disaster scenarios (Nooren et al. 2012).

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Building Services Like OTT Services
This is another option which companies can do to design
apps like OTT service providers. This service can have
done at the group level, but no company is operating in all
countries. For instance, if the Telenor group develops one
app, it can market and send it to only its customers in 13
countries. The OTT services have a more significant
advantage of being global. Also, Jazz Pakistan introduces
one app. Moreover, Jazz promised to bring multiple
options in it. The payments systems are incorporated in it,
but they could not compete and gain customer attention.
Filling The gap in The Market
OTT Service Providers still have many limitations. The user
of one app cannot call to the user of another app, which is a
big drawback of OTT services, telecom companies can only
fill. For example, messenger’s customers cannot message to
WhatsApp customers because two are different platforms;
companies can provide a platform where customers can
interact with multiple OTT service providers. That will be
an asset to any telecom company. Companies can develop
all in one need app just on Google where customers can
send emails, buy bundles of Internet, text and call to loved
ones, able to share photographs or videos and interact with
users of other OTT service providers.
Bundling OTT with Other Services
This trend is ubiquitous these days. Companies are proving
Internet bundles with OTT services. For example, in
Malaysia Maxis offers free Facebook and WhatsApp on the
purchase of their daily, weekly and monthly passes. On
purchase of passes, customers get the free point which
ultimately leads to free social media sites and OTT services
usage.
Customized Low-Price OTT Services
Telecom companies have mainly two KPIs on the network
level. One is network utilization, and the other is network
availability. Utilization target is given to the commercial
unit, while availability is the responsibility of the network
team. In urban areas especially where youth lives both
availability and utilization are on par. However, in the
villages, it is possible that TCH availability is high and
usage is low. Telecom companies can offer low-price
bundles to make sure that the available network is being
used instead of wasting the resources. Social media are
getting very popular. OTT services usage is expanding.
Usage of low-price OTT can help companies get habitual
Internet users, leading toward more Internet usage.
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Global Journal of Flexible Systems Management
Specialized OTT Bundles
Keeping in view the requirement and usage of OTT, tele-
com companies can also introduce specialized OTT bun-
dles. With OTT bundles, companies can partner with the
other apps to link their app with OTT with low-price
bundle. It can give telecom companies revenue from two
streams, for the new app which will be business-to-busi-
ness earning and from the bundle purchase which customer
will pay to buy the bundle.
Partnering with the OTT Service Providers
OTT service companies are associated with big companies.
Their earning is very high because of the freemium model
and availability across the globe. Facebook company Mark
Zuckerberg has the vision to expend Facebook messenger
and adds it as a payment tool. Similarly, Skype is owned by
Microsoft which has the vision to expend the Internet
facility to everyone. Telecom companies can also partner
with the OTT service providers who can create a win–
win situation for both telecom and OTT services.
Selling Apps Using Customer Information
Because of customer usage of information, telecom com-
panies can understand customers better, using artificial
intelligence, telecom companies can provide customer
information to new apps and Internet service providers.
Telecom companies have a campaign management system
which can be used to earn two-way revenue. Two-way
revenue mean, the telecom comapanies can charge from
both customers and businesses. Telecom companies can
promote the internet based applications to their customers,
if customers agree to use the application, they will ulti-
matly buying internet from the service provider (the tele-
com company).
Looking for Other Revenue Streams
Introduction of 5G and AI can open multiple streams of
revenue for telecom companies. As suggested in table by
Glohr (2019) the telecom companies can also focus on
business customers (Table 4).
Conclusion
With a thorough review of current telecom structure, its
issues, OTT services and the difference between OTT
services and telecom services review, it has been observed
that with the increase in Internet penetration problems for
telecom companies have increased. Telecom companies’
Global Journal of Flexible Systems Management

Table 4 Future of telecom companies

Author Future of telecom companies, possible options to compete with OTT

Krüssel and Göbel (2019) Expansion to provide OTT services, network optimization
Korzunowicz (2019) Telecoms can work for business and help companies in going through technology stability and change
Reith (2019) Another stream where telecom companies can focus on automation
Heinemann et al. (2019) Digitization will be everywhere, and health, transportation, education and telecom network will always be important
Lukowski et al. (2019) There will be 21 billion connected machines in 2021. The world is getting connected, and telecom companies have
the key role
Weber et al. (2019) Power is a critical aspect of current technology for the network side companies that need to manage the energy
sources. The authors show low-power wide area network as a game changer for the IoT
Heilen (2019) The author had an interview with ‘‘T. Heilen,’’ one of the well-known telecom professional in the German
telecommunication market and discussed with him the future potential of telecom
Steingröver et al. (2019) Telecom companies can partner and compete with OTT. Regulatory authorities can also block the OTT services
without paying a regulatory fee and behaving like operators
Eberhard and Heuermann The possibility of open access to the Internet for broadband deployment via the mobile wholesale network
(2019)
Obernolte et al. (2019) Telecom companies will have multiple revenue streams using infinite interact connectivity possibilities
Glohr (2019) Telecom companies can focus on getting revenue form business consumers
Grineisen and Rehme The telecom companies can either work as ‘‘bite pipe’’ or change attitudes toward OTT companies as partners or
(2019) make their own OTT services applications which will make an ecosystem
Wisselink and Schneider Telecom companies can introduce the Internet-of-things (IoT)-related products. Smart things are connected to the
(2019) telecom connection; the products can be light bulbs, electronic switches or energy measurement devices. Some
companies in Germany are already offering these smart home products
Hong and Dietze (2019) Business process automation, AI, M2M will bring multiple opportunities to telecom companies
Schmitz et al. (2019) Telecom companies in the future can provide the connectivity of stand-alone automation, robot process automation
(RPA), artificial intelligence (AI)/machine learning (ML) and natural language processing (NLP)-related solutions
Borowski and Khurana Network and infrastructure of telecom companies makes them king in 5 Era. The telecom companies can capture a
(2019) lot of opportunities in 5G
Nooren et al. (2012) The author discussed the earlier days Netflix popularity and possibilities of opportunities which telecom companies
will have. OTT content also creates opportunities for telecom companies
Krämer (2019) The author has discussed the possibilities of partnership which can resolve with telecom and OTT problems

previous revenue streaming like voice, SMS and other
value-added services revenue is continuously declining.
OTT services have almost replaced traditional telecom
services. It has been concluded that telecom companies
themselves are responsible for the decline reason. Because
of the complexity and limited features of traditional tele-
com services, customers were in need of these advanced
services. Therefore, the usage of OTT services has
increased exponentially.
It has been concluded that telecom companies have a
huge drawback compared to OTT services. Telecom
companies are serving particular countries. In contrast,
these OTT services are available globally, and they can
afford a freemium business model because of global
economies of scale. OTT services needed the least regu-
latory barriers or network infrastructure as they used the
existing telecommunication infrastructure. Because of
being available globally, their expansion has become very
rapid. One person can recommend OTT services to another
person sitting in some other countries. Because of this
scope of OTT, telecom companies could not prepare a
product again OTT services like WhatsApp and messenger.
On the one hand, although OTT services caused a
decrease in revenue from telecom revenue streams, on other
hand, it has created excellent opportunities for the telecom
service providers to earn from the Internet services. Internet
usage has increased since the introduction of OTT services.
Usage of social media services is increasing. Although the
increase on the internet usage has demanded from the tele-
com companies to invest more in infrastructure, however, it
also brought a lot of other opportunities. Telecom companies
can bundle their traditional services with OTT services.
Telecom companies can bundle new apps with popular OTT
services to earn from businesses and customers at the same
time.
As we are living in a knowledge economy, the biggest
advantage telecom companies have is the data of the cus-
tomers. Using artificial intelligence and customer data,
telecom companies have a huge market to sell products to
customers.

123

At last, government regulations are also significant, as
telecom companies are purchasing the bandwidth, license
of 4G or incoming 5G and investing in massive infras-
tructure. The government can also include the OTT ser-
vices in regulatory. However, in countries like Europe and
the USA OTT companies are free to operate. No operator
can block their services and slow down their services.
Government regulations are significant; regulations of
government can create winners and losers. Neutrality law
in the USA and Europe helped OTT companies to expand
worldwide. At the same time, this law has also helped these
companies to reach 43% world population.
Just like WhatsApp, Facebook, Uber and Netflix, there
are many companies expected in the future. Artificial
intelligence is expected to change the world. The trans-
formation will create enormous opportunities for compa-
nies. The authors have an idea at the end for telecom
companies which can be explored, and only telecom
companies can introduce a service like this. Currently, all
OTT services are operating separately. A person using
Skype cannot send a message to the customer using
Facebook messenger. WhatsApp users cannot send mes-
sages to Telegram customers. As only telecom companies
are aware and have the data of the customers about the apps
they are using, there can be a possibility to introduce a
service through which a customer using that service will be
able to communicate with all OTT services or at least two
services.
This situation brings a lot of opportunities for future
researchers. Complete review paper has raised numerous
questions which can be answered after understanding
customer preference. The existing customer preference
models could not help telecom companies to realize the
changes which happened due to the Internet. There is a
need for a new conceptual framework which helps big
companies to understand their customers and prepare
products and services accordingly. This research paper
also gives insights into policymakers to review the impact
of the OTT services on their economy. Policymakers can
impose taxes on OTT services. The world is expecting
5G till 2020 as per GSMA. The Internet speed will
increase from 1000 Mbps to 5000 Mbps. This will
increase demand from telecom companies to increase the
infrastructure, but the core beneficiary of the new
infrastructure is OTT companies. OTT and Internet-of-
things (IoT) companies will be able to operate better in
5G as they need more Internet speed to the operator, but
what this process will bring for telecom companies yet
needs to be studied. The policymakers can reassess the
complete OTT behavior and implement regulatory fees
on OTTs to rebalance the obligations. As shown in
Table 2, it is totally unfair competition between OTT and
telecom companies. Telecom regulatory authorities and
123
Global Journal of Flexible Systems Management
policymakers must realize the OTT services are only
benefiting the home country of OTT service providers
which is mainly the USA, but telecom companies are
serving every country’s economy.
Compliance with Ethical Standards
Conflict of interest The authors whose names are listed immediately
below certify that they have no affiliations with or involvement in any
organization or entity with any financial interest (such as honoraria;
educational grants; participation in speakers’ bureaus; membership,
employment, consultancies, stock ownership, or other equity interest;
and expert testimony or patent-licensing arrangements) or non-fi-
nancial interest (such as personal or professional relationships, affil-
iations, knowledge or beliefs) in the subject matter or materials
discussed in this manuscript.
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Key Questions
1. Why did customers stop using telecom traditional voice and
SMS services?
2. How can telecom companies compete with over-the-top
(OTT) services?
3. What is the future of telecom companies?
4. What should telecom companies do to improve their revenue
streams?
Mr. Muhammad Farooq is an independent
research consultant and Founder of Buzdar
Insights. He has more than 7 years of experience
in world leading telecom companies like Telenor,
China mobile, Maxis and ETISALAT in Market
Research, Customer Experience and Customer
Lifecycle Management. As an independent con-
sultant, Muhammad Farooq has helped more than
20 start-ups in Business Development and Strategy. He believes and
advocates customer perception-based and data-driven company per-
formance. He is also an academician and researcher. Based on 7 years
of career lessons, Farooq has authored two books ‘‘Customer
123
Global Journal of Flexible Systems Management
Experience Management: A Handbook to acquire and retain valuable
customers’’ and ‘‘50 Customer Experience Lessons.’’ Besides publi-
cations, he also has produced more than 20 research papers published
in well reputable journals like International Journals of operations
management and Journal of social sciences research. His research
interest areas are Flexible Systems Management, Transformative
Marketing, Customer Behavior, Customer-Based Brand Equity and
Customer Experience. He is also pursuing his Doctor of Philosophy
from Limkokwing University of Creative Technology, Cyberjaya,
Malaysia.
Dr. Valliappan Raju is a Senior Lecturer at the
Centre of Postgraduate Studies at Limkokwing
University, Malaysia. He has earned his Doctor of
Philosophy degree (Ph.D.) in Accounting Business
stream and Doctorate in Business Administration
in Entrepreneurship stream. He was awarded As-
sociate Professorship and subsequently got
appointed as Adjunct Professor in Linton Univer-
sity. His area of interest remains at Macroeconomics, Entrepreneur-
ship and Artificial Intelligence. Among 20 researchers under his
supervision, 11 scholars have been conferred Ph.D. award as on
December 2018. He has published 112 research papers in Interna-
tional refereed journals as the main author, out of which more than 40
research papers have been published in SCOPUS/ISI-indexed jour-
nals. Vally has fetched grants under Innofund Scheme, FRGS and is a
proud recipient of FULBRIGHT scholarship for US articulation. His
recent Key Note Speech at ICCI-SEM Conference enabled him to
serve as an editorial member of three SPRINGER journals followed
by ESN journals, KPG journals, GRDS journals, etc. Assoc. Prof.
Vally is an active member of the World Economics Association
(USA) and was invited by Bernama Television of Malaysia to discuss
National Budget. His entrepreneurial ventures include an educational
institution in 2009 and a research foundation in 2017. Vally, an ardent
researcher, thrives to calibrate the application of his researches to
serve for a cause. Presently, he is affianced with his postdoctorate
fellowship on AI research.