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Impact of Over-the-Top (OTT) Services on the Telecom Companies in the Era


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Article  in  Global Journal of Flexible Systems Management · April 2019


DOI: 10.1007/s40171-019-00209-6

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Impact of Over the Top (OTT) Services on the Telecom Companies in the Era of Transformative Marketing
Muhammad Farooq
Ph.D. Scholar, Limkokwing University of Creative Technology
Email: Farooq.buzdar2@gmail.com
ORICD No. https://orcid.org/0000-0002-5371-0351

Valliappan Raju
Senior Lecturer, Limkokwing University of Creative Technology
Email: Valliappan.raju@limkokwing.edu.my

Abstract

Due to digitalization today, we are more connected than ever Introduction to the internet has transformed traditional
before in human history. Access to the internet has increased businesses; This transformation leads to the era of
from 16 million in 1995 to 4,157 million users by the end of transformation Marketing (Kumar, 2018; Meyer, 2018;
December 2017. The industry which helped humanity Varadarajan, 2018) . It has transformed different sectors. For
connected and made the world a global village is the instance, publishing, advertising, music media is completely
telecommunication industry. However, today the telecom different today compared to a decade ago (Akamai, 2013). The
companies are facing revenue losses, for instance, revenue of twenty-first century is the century of disruption. In the last two
value-added services of telecom companies in Pakistan has decades, the changes the world has seen were never witnessed
reduced from Rs5,861Million in 2012 to 236Million by the end in human history. Many changes which the world has
of 2017. Similarly, because WhatsApp, Skype, and Messenger embarrassed made people life easy ( Farooq, Zareen, Younas,
usage the long-distance call and SMS revenue of telecom Khalil-Ur-Rehman, & Yasmin, 2018; Farooq, Muhammad,
companies in Pakistan have reduced from Rs47,969Million in Raju, Kalimuthu, & Qadir, 2019). Introduction of iTunes
2008 to 19,555 Million at the end of 2017. With the empirical helped people to listen, their desired customized songs without
evidence from Pakistan, and literature from all over the world, buying the complete albums, Airbnb is offering the people, the
this overview research paper summarizes the issues of the opportunity to leave the hotels and be guest of someone in some
telecom sector and suggests a way forward to help the telecom other country or region. Although these disruptions had a huge
companies to come out of this situation. For review paper, impact on disrupted industries but the iTunes, YouTube and
official telecom regulatory reports and GSMA reports have Uber did not use any platforms or infrastructure of industries
been referred. This study concluded that at one side even which they disrupted. In contrast, there is another sector which
though telecom company’s revenue is decreasing, but on is in the process of disruption because of digital evolution. This
another side, it is bringing enormous opportunities for the sector is the telecommunication sector, Over the Top (OTT)
companies. Telecom companies can get the benefit of changing services, i.e., Skype, WhatsApp, IMO and Facebook are
customer preferences’ by understanding customers’ reaching to the customers directly using cellular companies-
requirements, producing and selling internet and digital value- built infrastructure, without paying any regulatory or platform
added products and services in parallel with traditional fees. Because of global economies of scale, the OTT company
telephony services are offering the fermium model. However, this is proving the
kiss of death for telecom traditional voice and messaging
Keywords: Customer Preferences, Digitalization ,
revenue (Regina, 2017). The issue, how telecom companies can
Telecommunication, Transformative Marketing,
Over the TOP (OTT) compete with OTT is in the debate from the previous 10 years.
Imposing regulations on telecom companies and giving free
1. Introduction & Background
hands to the OTT to operate for similar services also raises

1
questions on regulatory authorizes in multiple countries. so popular and now, what are the possible options which
Therefore, this study is aimed to identify the ways how OTT is telecom companies and regulatory authorities have to address
impacting the telecom companies, why OTT services became the telecom concerns.

2. Problem Statement
Strategic flexibility of the manager plays in an essential role in dynamics of the telecom business in the last ten years (Krüssel
the success of any firm (Shalender & Yadav, 2019), because of & Göbel, 2019). Telecom companies competing within their
the flexibility of managers and telecommunication companies industry and outside the industry with OTT services in parallel.
ability to embrace new technologies. Telecoms are the For instance, In Pakistan, there are four telecom companies.
companies which survived in every era and reshaped its These companies have 154 Million customers as of December
services due to its flexible systems and management (Amin & 2018. The telecom industry is already extremely saturated.
Horowitz, 2008; M. K. Sharma, 2010; Vidyarthi & Singh, 2011; Table-1 shows the telecom subscribers of Pakistan from July
Khare, 2014; A. Sharma, Medudula, & Patro, 2015;Sushil, 2018 to December 2018. In 6 months, there was no substantial
2015; Gupta, Tyagi, & Upadhyay, 2018). With the increase in the subscriber base, as already every person has a
advancement of technology, the telecom companies have telecom connection. Gaining a new connection means
successfully updated their technology from 2G to 3G and 3G to snatching customers from the competition. As shown in Table.1
4G. These technological developments lead to innovation and in September 2018, Zong and Ufone got 1% extra market share,
competition between telecom companies at the service level. but at the same time, the two other companies Jazz and Telenor
However, the entrance of OTT has drastically changed the lost its 1% market share respectively
.
Table 1 Telecom Within Industry Competition Analysis

Market Share Subscribers Count Analysis


Category PMCL(Jazz) PTML(Ufone) CMPAK(Zong) Telenor Total
Jul-18 55,597,047 20,499,075 31,021,206 43,436,455 150,553,783
Aug-18 56,006,446 20,616,112 31,166,960 43,300,407 151,089,925 Saturated Market,
Extreme Competition
Sep-18 56,094,685 20,835,683 31,475,508 43,253,025 151,658,901 Between the
Oct-18 56,177,506 21,109,741 31,707,965 43,159,796 152,155,008 Competitors
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
Market Share %
Date PMCL(Jazz) Telenor CMPAK(Zong) PTML(Ufone) Total
Jul-18 36.9% 28.9% 20.6% 13.6% 100.0%
Aug-18 37.1% 28.7% 20.6% 13.6% 100.0%
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%
Gaining New
Dec-18 36.5% 28.5% 21.0% 14.0% 100.0% subscribers means
Change in Market Share snatching the
customers from the
Date PMCL(Jazz) Telenor CMPAK(Zong) PTML(Ufone)
competition
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%
Source:(PTA,2019).
2
An industry which is facing, cutthroat competition inside is 17% in investment in 2017-18 compared to 2016-17. The only
also, facing the demand for better quality services because of area which has increased is the usage of the internet, which did
increased internet demand. To expand the availability of its result in more revenue for telecom companies. The reason
services telecom companies have invested 78,966 million Pkr behind not increase the revenue of the same percentage is OTT.
in 2017-2018 which is 24% of 2018 total telecom revenues. Customers are buying the fixed internet plans and using OTT
Table.2 from the annual report of Pakistan Telecommunication for communication which is cannibalizing the voice and SMS
Authority (PTA) December 2018, report shows the increase of revenue of telecom companies.
Table 2 Analysis on Two-Sided Problem which Telecom Companies are Facing

Customers demand high-speed internet ( Network Infrastructure from Telecom) to use OTT services.
2016-17 2017-18
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%

( PTA,2019)
The loss of telecom companies is not only limited to voice call telecom, the VAS revenues of the telecom companies have also
revenue. It has also disrupted the traditional VAS and decreased. VAS revenues include revenue from SMS- Short
international calls revenue stream. For instance, in Pakistan Message Service (SMS) or other services like Ringback tone.

VAS Revenues of Cellular Companies (SMS, Small Non-Internet Features)


8,000
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

Figure 1: Decline in Telecom Companies VAS Revenue

Source: (PTA, 2018)


Before OTT dominance the telecom companies one of the 47,969 million in 2008-2009 to 19,555 at the end of 2017(PTA,
significant streams of revenue was the (Long Distance 2019).
International) LDI call revenues. LDI revenues decreased from

Cellular Companies Long Distance Revenue (LDI) in PKR.


60,000 47,969 44,964 43,874 40,890
34,195 38,572
40,000 32,675 32,554
19,555
20,000

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

Figure 2: Decline in LDI Revenue of Telecom Companies

Source:(PTA, 2019)

3
3-Related Literature: Global Perspective, How OTT is anticipated the future of telecom companies in the book “Future
Impacting Telecom Companies? of telecom” in detail.
In Global perspective, today in 2019, Out of seven billion Krüssel and Göbel (2019) listed four types of players in the
people living in this world, four billion people are using the telecommunication business. The first player is the network
internet, which is 54% of the world population. Count of operators. Network operators are cellular companies, the
Internet users has grown from 16 million to 4,157 million from second type players are the resellers, these companies don’t
1995 to 2017 (World internet stats,2018). The increase in have their own infrastructure or content, they just either resell
internet utilization happens due to the extensive infrastructure the content or infrastructure, the third type of players are the
of telecom companies. Telecom companies overall have spent OTT sp, these are smaller OTT companies, and The last players
in billion in making this infrastructure. Besides this, as country are the OTT Ecosystem companies, for example, Facebook and
regulations, telecom companies have to buy the bandwidth and Google. The author is of the opinion that in the future every
3G, the 4G licensee. OTT companies are using a model called player has different options. The first player Network operator
“Fermium.” As per HBR “Over the past decade “Freemium”— can expand its existing services and provide service like OTT
a combination of “free” and “premium”—has become the companies. It will reduce the bridge between the company and
dominant business model among internet start-ups and end user which currently exist in the market because of OTT.
smartphone app developers. Users get basic features at no cost To survive, telecom companies infrastructure is important.
and can access richer functionality for a subscription fee. If you OTTs need telecom companies infrastructure. Krüssel and
have networked on LinkedIn, shared files through Dropbox Göbel (2019) are of the opinion that reseller and OTT-sp will
watched TV shows through Hulu or searched for a mate on disappear. The other big group is OTT-Ep. OTT can integrate
Match, you have experienced the model firsthand. It works for their services and invest in infrastructure. Companies can only
B2B companies as well—examples include Box, Splunk, and focus on OTT and expand their services further.
Yammer” These companies can afford freemium because they in 2019, after the introduction of 5G, the Network operators
are not paying for the licensee or any regulatory price., should pay more focus to the consumers. The connection which
bandwidth or any other regulatory prices. However, on time OTT broke with the end consumer and telecom companies can
these companies are using telecom companies set unfractured, be reestablished. The focus should be on network optimization
bandwidth and licensee (Erik, 2014) (Korzunowicz, 2019). Similary Keith (2019) also said that the
3.1.Academic Literature network is still the king.Role of enterprise architecture.
Several studies have been conducted on the future of telecom Companies just need to focus on agile methods and network
in the last 10 years (Nooren, Leurdijk, & van Eijk, 2012; Sujata optimization. Beside network strength, the telecom companies
et al., 2015;Krüssel & Göbel, 2019). Most of the studies can play an important role in ecosystem after the introduction
discussed the non-technical aspects for telecom companies; In of 5G, and it will be one of the prominent areas where telecom
this study, the authors have included all studies which have companies can earn revenue (Heinemann, Platzen, and Schiefer
discussed the future in telecom in the context of OTT services. 2019). AI, Machine learning and digitalization will not be
José Ganuza and Fernanda Viecens (2014) gave one conceptual limited to start-ups; the result is an ecosystem, which will
framework on the OTT content impact on telecom companies. connect all the aspects of life Telecom, health, transportation,
The research covered the only content part and predicted it and education. There will be 21 billion connected machines in
would increase the revenue of telecom companies. Sujata et al. 2021. The world has just getting connected (Lukowski, Rauch,
(2015), discussed the impact of OTT on telecom companies in and Rosendahl 2019;Weber, Schilling, and Wisselink 2019).
the Indian context and concluded that these changes in the Increase internet speed and advanced technology made the
industry are happening because of customer preferences. power important. In future power is a critical aspect of current
However, the author also discussed the concerns which telcos technology for the network side companies need to manage the
have over OTT services. In 2019, Krüssel and Göbel energy sources. The authors show Low Power wide area
network as a game changer for the IoT. Eberhard and

4
Heuermann (2019) worked on regulatory possibilities.The (Grineisen and Rehme,2019 ;Wisselink and Schneider, 2019;
author provided the regulatory solutions on how companies the Hong and Dietze 2019; Krämer 2019).
network operators can compete with the OTT. OTT has the Today in 2019, as the Figure-5 titled “Digitalization,
biggest issue of connectivity. In this regard the possibility of Worldwide statistics” shows that four Billion people are using
open access of the internet for broadband deployment via a the internet, three billion people are social media users, five
mobile wholesale network. In AI B2B companies will Billion unique mobile users. Out of three Billion people, 2.9568
transform, and Telecom companies can focus on getting use social media on the internet. All this has become possible
revenue from business consumers. Telecom companies must be because of the infrastructure of telecom companies(Nathan,
ready to accept the changes. Otherwise, they remain like “bite 2018).
pip.” In simple words dump pipes which will carry the internet.

Active Social Media Active Mobile Social


Total Population Internet Users Unique Mobile Users
users Users

Active Social Unique Mobile Active Mobile


Total Population Internet Users
Media users Users Social Users
7.593 Billion 4.021 Billion
3.196 Billion 5.135Billions 2.958Billions

Urbanization
Penetration 53% Penetration 42% Penetration 68% Penetration 39%
55%

Figure 3 Digitalization, Worldwide statistics

Source :(Nathan, 2018)


These statistics were predicted in many reports before the In another report by Spirit DSO name “The Future of Voice”
2018 current situation. In the world, cellular revenue forecasts has also reported the impact of Over the Top Services on the
reports said that the Total SMS revenue of Telecom Voice over Internet Protocol (VoIP) Services revenue. The
companies would fall from 120 billion in 2013 to 97 billion in report states that all over the world telecom revenues would
2018 because of the increase in the usage of OTT services. decline from 970 billion USD in 2012 to 800 Billion in 2020.
Cisco also predicted that smartphone data traffic would rise at As a result, the report predicted that this increase in usage of
Compound Annual Growth Rate (CAGR) 61%. CISCO report OTT would be lost around 479 USD loss of revenue due to
also predicted that usage of the internet would increase from voice. In one side telecom companies, the previous
1.5 Exabyte in 2013 to 15.9 exabyte in 2018. It was also infrastructure was getting outdated on another side to provide
explicitly mentioned in the report that this growth would cause the internet services and handle traffic telecom companies were
an increase in traffic and ultimately it will increase pressure on supposed to invest in the infrastructure.
the telecom service providers. Telecom companies have to One another report says that total OTT minutes will reach up to
increase their capacity in bandwidth, transport network, and 1.7 trillion by the end of 2018, and this count will cause a loss
radioactive network. of 63 Billion USD to telecom companies. The report also
highlighted that demand for online text (messages) application
5
would also increase and these services usage will also happened? Why customer preferences changed and why
ultimately reduce revenue of telecom short message service telecom companies are left behind. There are many gaps
(SMS) earnings. All these developments will at the end of the telecom companies should fulfill and improve their services.
day demand from telecom companies to increase its 4.Findings and Recommendations
infrastructure and invest in a better experience. 4.1: The reason why customer shifted to OTT
Heavy Readings report “Internet TV, Over-the-Top Video, & Telecom companies are in communication business for many
the Future of IPTV Services” highlighted the issues in 2011 years with millions of subscriber base and vast infrastructure.
which we are telecom companies are facing today. The report Despite all this, some smaller startups started at home are
stated that this perception is found among telecom executives causing them 400 Billion annual loss. Why did this happen?
that we might face competition from OTT video service Just like the music industry, which was trying to sell the
providers. The report also highlighted that all the service which customers complete CD album despite that the listeners liked
use telecom network with acquiring IP networks or paying for only one song in the CD. Taxi services were very annoyed. Taxi
these networks. The report also discussed possible options for men were not updating them themselves with changing
how telecom companies get to benefit from this situation. One technology; customers were supposed to go to the taxi, bargain
option was bonding with OTT services providers and coming on fair or make sure the taxi man’s meter is ok. Customers were
up with the product which mutually beneficial for both and has fed-up of the taxi services and music albums. Therefore, they
a win-win situation. endorsed YouTube and Uber. Similarly, the popularity of OTT
As stated in the Heavy readings report that telecom companies services was the reason behind complex and telecom companies
can benefit from this situation by creating a product which is expensive and difficult to use SMS and call packages. For SMS
suitable for both companies. Although the numbers of confirmation there was one value-added service with extra
traditional voice minutes and revenue of companies will charges. Sharing videos and pictures were difficult. The MMS
decline, SMS usage of telecom companies was also expected to service of telecom companies was very expensive. Due to all
decline, but the right point for telecom companies was that it these issues customers were looking for an option a long time
was the usage of OTT service was expected to increase their ago. Table-2 explains in details the difference between SMS
internet bundles usage, ultimately producing the revenue for service offered by Cellular service providers vs. the services of
these companies. Companies could have increased the revenue OTT companies which are providing all over the world.
just like china mobile internet usage increase by 187%. The The text messages of telecom companies had a limit of 160
increase in OTT usage automatically increased the usage of the characteristics. There were no group SMS options. Customers
internet of telecom companies. were supposed to send SMS or talk to customers individually.
Heavy readings report is right. As the revenues in-telecom There was no system of talking to people in one group or one
sector of Pakistan has increased from 2008-2009 onward. window which was introduced by OTT companies.
Companies revenue is increasing every year despite the Before the introduction of OTT services, telecom companies
reduction in VAS and Internal calls revenue reduction the were selling these services with the name of value-added
overall revenue of the companies is increased. The increase is services. Videos and audio calls services were not available.
due to an increase in telecom companies overall internet sale. Today All OTT services providers first don’t have any
Figure-6 titled “Celluar Company Revenue” shows the definite limitation on the count of messages or limit of the text.
trend of revenue from 2008 to 2017. Customers need internet access. The OTT services provided an
This situation is not only about having less proportion of option to make audio and video call. The Facebook messenger
revenue or telecom companies letting OTT services to use their has made things much more comfortable. For WhatsApp
infrastructure. Is it about the position of telecom services? services, customers need a mobile number. For the messenger
Where do they stand? Alternatively, Telecom companies are even, the customer does not need to have a mobile connection.
dumb pipes for OTT services? Should the companies revamp The credit for OTT services updated also goes to smartphones.
themselves? We will try to explore the reasons why all this There was a storage capacity issue in the SMS services.

6
Customers were supposed to delete the earlier services. Now people. The Emoticons and Stickers can also be useful for
using the WhatsApp and Facebook messenger, Hangout, interaction among the people where they have different
Telegram, and all other OTT services, there is no limit on languages.
sending pictures, videos. Customers can save videos on their Recording audio or video calls were once complicated. Once
mobile phones. Companies like Telegram also offers to store recorded the telecom companies demanded them to transform
the data conversation and send the files to someone or save on into a specific format before sending. After sending a text
another cloud. message confirming the delivery status of the message was very
The OTT services have made the Chat very interesting. People difficult. However, now in all OTT services customers have to
can interact with each other in groups. There are multiple keep pressing one button. They can take the pictures, record an
studies conducted using the WhatsApp groups not only un audio or video and send it to the desired person or desired
universities among students but also in the corporate sector. group.
Today any smartphone user cannot imagine not having a OTT companies are not limiting themselves to communication.
WhatsApp group. Communication is effortless. Customers can Now, these companies are also focusing on the payment system
interact with up to 150 people simultaneously in one group. or playing games. These OTT company’s services extension is
WhatsApp groups are the principal source to gather people for leaving the only option for the companies to bond with them.
the protests, and it has been evident from the interaction of the Companies like Telegram are more interested in privacy. So,
political parties in Pakistan. It is also used for political they answer the privacy issue. Customers can send end to end
purposes. encrypted messages.
Compared to SMS services, the OTT services offer the sharing One another developed which OTT services provided is the
of contacts and location to the subscribers. In apps like ability to use them in multiple systems. Facebook messenger is
WhatsApp, there is an option to share the current location and the best example. It can be used simultaneously on the laptop
even the live location for one hour. These OTT services contain and mobile. There is no limitation on selecting the mobile or
many pictures, Emoticons, and Stickers that these made the WhatsApp. Customers can use their logins anywhere.
communication very easy for the customers. There are already Similarly, now WhatsApp is also offering the same feature.
many stickers and emoticons that in many cases there is no need With QR code customers can use WhatsApp on the desktop.
to write the messages. With the help of just stickers and Table-1 compares the traditional telecom services and OTT
emotions, it is easy to talk to someone. It is beneficial for the services in detail.
kids for communication. It is also helpful for undedicated

Table 3 Telecom Vs. OTT Services

Category Telecom Product OTT Services (Famous Services)

Services SMS TELEGRAM WhatsApp Facebook Messenger HANGOUTS


Text ✓ ✓ ✓ ✓ ✓

Audio Call × ✓ ✓ ✓ ✓

Video Call × ✓ ✓ ✓ ✓

User Stories/Moments × ✓ ✓ ✓ ✓

Open source × ✓ × × ×
Characters 160 No Limit No Limit No Limit No Limit
Group Chat × ✓ ✓ ✓ ✓

Emoticons × ✓ ✓ ✓ ✓

7
Stickers × × × ✓ ✓

Photos Sharing × ✓ ✓ ✓ ✓
Videos Sharing × ✓ ✓ ✓ ✓

Audio Sharing × ✓ ✓ ✓ ✓

Location Sharing × ✓ ✓ ✓ ✓

Contact × ✓ ✓ ✓ ✓

Walkie-Talkie × ✓ ✓ ✓ ✓

Voice & Video × × × ✓ ×

Free Mobile App download N/A ✓ ✓ ✓ ✓


Source: Author Self-Created
which telecom companies have. Here are the options which
There can be many reasons why customer shifted from telecom companies have today to deal with the OTT services.
traditional voice and SMS services of telecom companies to 4.2.1: Blocking the OTT Services
OTT services. If we apply technology acceptance reasons and Telecom companies can block the OTT service providers for a
do a cost-benefit analysis of the OTT vs. traditional telecom short period and ask for the companies for market share. In the
companies then as per the technology acceptance model is USA and Europe, there is one law called neutrality law. As per
given by Davis (1989) here are two reasons behind the naturality law companies cannot ban internet content or
technology acceptance model. Multiple scholars also accepted services providers. They cannot even slow the speed of the
these two components of technology acceptance once Davis services. In a country, like Pakistan were neutrality law does
(1989) introduced these( F. D. D. Venkatesh, 2000; Venkatesh, not apply companies can try this tactic but from this tactical fear
Morris, Davis, & Davis, 2003;Pick, Gollakota, & Singh, 2014; of losing is very high. The customer is used to with these
V. Venkatesh & Bala, 2008). Technology acceptance model services. There are already many services. For telecom
correctly applied on the adaption of the OTT services there is companies, it is challenging to control the OTT services
Perceived Ease of Use (Davis, 1989) and Ease of Usefulness providers. Also, it will affect the revenues of the companies as
(Davis, 1989) in using OTT services compared to telecom customers mainly use the OTT services after purchasing
services. internet bundle from a telecom company.
4.2: How Can Telecom Companies Get out of this Situation? While previously, disputes between the European Union (EU)
As discussed in the comparison section it is evident that OTT member countries, e.g., Spain and France have blocked OTT
services are much advanced and widespread than what telecom services. In the EU when OTT services started providing
companies can offer today. Telecom companies are offering services like voice call services of telecom companies. The
affordable internet bundles. Using them customers are using countries gave the justification of blocking services, that they
OTT services. If telecom companies continue this very soon, OTT services were acting like telecom companies if so, the
they will lose their voice and message revenue completely. The companies should also pay the regulation fee and fulfill all the
only way in the era of digitalization any company has is to responsibilities like telecom companies. The very nature of IP
under the customer preferences (Buzdar, Janjua, & Khurshid, communications means that the VoIP connections are often
2016; Farooq & Jabbar, 2014). Telecom companies can review location-independent and reliance on a functional electricity
customer preferences trend and deal with OTT services supply makes them inferior in some disaster scenarios. (Nooren
accordingly. With the current situation, telecom companies et al., 2012)
cannot continue. If we continue in the coming years, these 4.2.2:Building Services like OTT Services
company will be only dumb internet pipes. Telecom companies This is another option which companies can do to design apps
can also be focusing on customer usage trends and help like OTT service providers. This service can have done at the
companies in marketing strategies. Data is a tremendous asset group level, but no company is operating in all countries. For
8
instance, if the Telenor group develop one app, it can market resources. Social media is getting very popular. OTT services
and send it to only its customers in 13 countries. The OTT usage is expanding. Usage of low price OTT can help
services have a more significant advantage of being global. companies in getting habitual internet users leading towards
Also, Jazz Pakistan introduces one app. Moreover, jazz more internet usage.
promised to bring multiple options in it. Incorporating the 4.2.6: Specialized OTT bundles
payments systems in it but they could not compete and gain Keeping in view the requirement and usage of OTT Telecom
customer attention. companies can also introduce specialized OTT bundles. With
4.2.3: Filling The gap in The Market OTT bundles companies can partner with the other apps to link
There is a gap in the OTT services market services which is the their app with OTT with low price bundle. It can give telecom
using one service customers cannot call or SMS on another companies revenue from two streams, for the new app which
service. For example, messenger’s customers cannot message will be Business to Business earning and from the bundle
to WhatsApp customers because two are different platforms purchase which customer will pay to buy the bundle.
companies can provide a platform where customers can interact 4.2.7 Partnering with the OTT service providers
with multiple OTT service providers. That will be an asset to OTT service companies are associated with big companies.
any telecom company. Companies can develop all in one need There earning is very high because of the fermium model and
app just on google where customers can send emails, buy availability across the globe. Facebook company Mark
bundles of internet, text, and call to loved ones, able to share Zuckerberg has the vision to expend Facebook messenger and
photos or videos and interact with users of other OTT service add it as a payment tool. Similarly, Skype is owned by
providers. Microsoft which has the vision to expend the internet facility to
4.2.4:Bundling OTT with other Services everyone. Telecom companies can also partner with the OTT
This trend is ubiquitous these days. Companies are proving service providers who can create a win-win situation for both
internet bundles with OTT services. For example, in Malaysia telecom and OTT services.
Maxis offers free Facebook and WhatsApp on the purchase of 4.2.8 Using Customer Information, Selling Apps
their daily, weekly and monthly passes. On purchase of passes, Because of customer usage of information, telecom companies
customers get the free point which ultimately leaders to free can understand customers better, using artificial intelligence,
social media sites and OTT services usage. telecom companies can provide customer information to new
4.2.5: Customized Low-price OTT Services apps and internet service providers. Telecom companies have a
Telecom companies have mainly two KPI’s on the network campaign management system which can be used to earn two-
level. One is network utilization, and the other is network way revenue. Charging form the business for promoting their
availability. Utilization target is given to the commercial unit apps and charging from customers for using their internet.
while availability is the responsibility of the network team. In 4.2.9 Looking for other revenue streams
urban areas especially where youth lives both availability and Introduction of 5G and AI can open multiple streams of revenue
utilization are on par. However, in the villages, there is a for telecom companies. As suggested in below table by Glohr
possibility TCH availability is high, and usage is low. Telecom (2019) the telecom companies can also focus on business
companies can offer low price bundles to make sure the customers.
available network is being used instead of wasting the

Table 4 Future of Telecom Companies

Author Future of Telecom Companies, Possible Options to compete with OTT


(Krüssel & Göbel, 2019) Expansion to provide OTT Services, Network Optimization
(Korzunowicz, 2019) Telecoms can work for business and help companies in going through technology stability &
change
(Reith, 2019) Another stream where telecom companies can focus on Automation

9
(Heinemann, Platzen, & Digitization will be everywhere, Health, transportation, education and telecom network will
Schiefer, 2019) always be important
(Lukowski, Rauch, & There will be 21 billion connected machines in 2021. The world is getting connected, and
Rosendahl, 2019) telecom companies have the key role
(Weber, Schilling, & Power is a critical aspect of current technology for the network side companies need to
Wisselink, 2019) 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 “T. Heilen,” one of the well know telecom professional in the
German telecommunication market and discussed with him the future potential of telecom.
(Steingröver, Cardozo Larrea, Telecom companies can partner and compete with OTT. Regulatory authorities can also block
& Zhelev, 2019) the OTT services without paying a regulatory fee and behaving like operators
(Eberhard & Heuermann, The possibility of open access to the internet for broadband deployment via the mobile
2019) wholesale network.
(Obernolte, Hauk, & Aumann, Telecom companies will have multiple revenue streams using infinite interact connectivity
2019) possibilities
(Glohr, 2019) Telecom companies can focus on getting revenue form business consumers
(Grineisen & Rehme, 2019) The Telcom companies can either work as “bite pipe” or change attitudes towards OTT
companies as partners or make their own OTT services applications which will make an
ecosystem
(Wisselink & Schneider, Telecom companies can introduce the Internet of Things (IoT) related products. smart things
2019) which are connected to the telecom connection, the products can be e light bulbs, electronic
switches or energy measurement devices . Some companies in Germany are already offering
these smart home products
(Hong & Dietze, 2019) Business process automation, AI, M2M will bring multiple opportunities to telecom
companies
(Schmitz, Stummer, & Gerke, Telecom companies in the future can provide, the connectivity of stand-alone automation,
2019) Robot process automation (RPA), Artificial Intelligence (AI)/Machine learning (ML) and
Natural language processing (NLP) related solutions
(Borowski & Khurana, 2019) Network & Infrastructure of telecom companies makes them King in 5 Era. The telecom
companies can capture a lot of opportunities in 5 G
(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

5.Conclusion model because of global economies of scale. OTT services


With a thorough review of current telecom structure, its issues, needed the least regulatory barriers or network infrastructure as
OTT services and the difference between OTT services and they used existing telecommunication infrastructure. Because
telecom services review it has been observed that with the of being available globally their expansion has become very
increase in internet penetration problems for telecom rapid. One person can recommend OTT services to another
companies has increased. Telecom companies’ previous person sitting in some other countries. Because of this scope of
revenue streaming like Voice, SMS and other value-added OTT telecom companies could not prepare a product again
services revenue is continuously declining. OTT services have OTT services like WhatsApp and messenger.
almost replaced traditional telecom services. It has been In one side, Although OTT services caused a decrease in
concluded that telecom companies themselves are responsible revenue from telecom revenue streams on another side, it has
for the decline reason. Because of the complexity and limited created excellent opportunities for the telecom service
features of traditional telecom services customers were in need providers to earn from the internet services. Internet usage has
of these advanced services. Therefore, the usage of OTT increased since the introduction of OTT services. Usage of
services has increased exponentially. social media services is increasing. Although the increase on
It has been concluded that telecom companies have a huge the internet has demanded form the telecom companies to
drawback compared to OTT services. Telecom companies are invest in infrastructure, it also brought a lot of other
serving particular countries. In contrast, these OTT services are opportunities. Telecom companies can bundle their traditional
available globally, and they can afford a fermium business services with OTT services. Telecom companies can bundle

10
new apps with popular OTT services to earn from businesses to 5000 Mbps. The will increase demand from telecom
and customers at the same time. companies to increase the infrastructure, but the core
As we are living in a knowledge economy biggest advantage beneficiary of the new infrastructure is OTT companies. OTT
telecom companies have is the data of the customers. Using and Internet of Things (IoT) companies will be able to operate
artificial intelligence and customer data telecom companies has better in 5G as they need more internet speed to the operator
a huge market to sell products to customers. but what this process will bring for telecom companies yet it
At last, government regulations are also significant, as telecom needs to be studied. The policymakers can reassess the
companies are purchasing the bandwidth, license of 4G or complete OTT behavior, implement regulatory fees on OTTs to
incoming 5G and investing in massive infrastructure. The rebalance the obligations. As shown in the Table-2 it is totally
government can also include the OTT services in regulatory. unfair competition between OTT and telecom companies.
However, in countries like Europe and the USA OTT Telecom regulatory authorities and policymakers must realize
companies are free to operate. No operator can block their the OTT services are only benefiting the home country of OTT
services and slow down their services. Government regulations service providers which is mainly the USA, but telecom
are significant; regulations of government can create winners companies are serving every country economy.
and losers. Neutrality law in the USA and Europe helped OTT 6-References
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Declaration of conflict of interest
Mr. Muhammad Farooq is
an independent research Manuscript title: Impact of Over the Top (OTT) Services on
consultant and Founder of
Buzdar Insights. He has more the Telecom Companies in the Era of Transformative
than seven years of Marketing
experience in world leading
telecom companies like
Telenor, China mobile, The authors whose names are listed immediately below certify
Maxis and ETISALAT in that they have NO affiliations with or involvement in any
Market Research, Customer organization or entity with any financial interest (such as
Experience, and Customer Lifecycle Management. As an honoraria; educational grants; participation in speakers’
independent consultant, Muhammad Farooq has helped bureaus; membership, employment, consultancies, stock
more than 20 startups in Business Development and ownership, or other equity interest; and expert testimony or
Strategy. He believes and advocates customer perception patent-licensing arrangements), or non-financial interest (such
based and data-driven company performance. He is also an as personal or professional relationships, affiliations,
academician and researcher. Based on 7 years of career knowledge or beliefs) in the subject matter or materials
lessons Farooq has authored two books "Customer discussed in this manuscript.
Experience Management: A Handbook to acquire and
retain valuable customers” and “50 Customer Experience Author names:
Lessons”. Besides publications, he also has produced more Muhammad Farooq
than 20 research papers published in well reputable Valliappan Raju
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.

Assoc. Prof. Dr. Valliappan


Raju is a Senior Lecturer at
the Centre of Post Graduate
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 Associate
Professorship and subsequently got appointed as Adjunct
Professor in Linton University. His area of interest
remains at Macroeconomics, Entrepreneurship 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 International refereed journals as the main
author, out of which, more than 40 research papers have
been published in SCOPUS / ISI indexed journals. Vally
has fetched grants under Innofund Scheme, FRGS and a
proud recipient of FULBRIGHT scholarship for USA
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 post
doctorate fellowship on AI research.

14

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