Thanks to the advances in telecommunications and mobile computing, smartphones
have emerged as a vital tool for enhanced communication, connectivity and
productivity. With the increased penetration of smartphones and mobile
applications, Over-The-Top (OTT) mobile messaging applications now constitute a
significant threat to mobile network operators’ SMS-messaging revenues. The
literature available today shows that OTT applications like WhatsApp, Viber,
Facebook Chat, Skype, etc will cost $54 billion lost in revenue to mobile network
operators. As a result, it becomes critical for mobile network operators to put in place
effective strategies that will slow the impact of OTT apps.
This research investigates the pro-active measures that mobile operators have taken
in developing countries to address this challenge and also measures the
effectiveness of these measures in their respective markets.
Data was collected through questionnaires from over 400 pre-paid subscribers in
Accra. The findings of the research show that OTT apps are changing the behaviour
of smartphone users regarding text messaging. The research revealed that more
than half smartphone users send less than 5 SMS messages a day. However, with
the introduction of “bundles” by mobile operators in Ghana as a strategy to generate
a sustainable average revenue per user seems to be working. Majority of
subscribers perceive data bundle as a cheaper and better option than Pay-As-You-
Go. However, the introduction of SMS bundle seems not to be an efficient strategy
against OTT apps since they are limited to on-net communications only.
Table of Contents
1- Introduction
1-1- Background of the study
1.1.1. Introduction
1.1.2. Current situation of the Ghanaian mobile telecommunication industry.
1-2- Problem statement
1-3- Research questions
1-4- Research objectives
2- Literature review
2.1- Introduction
2.2- Drivers of OTT apps usage and their benefits to subscribers
2.3- Effect of smartphone penetration rate on mobile operators
2.4- Challenges faced by mobile operators regarding the use of OTT apps by their subscribers
2.4.1- SMS VS. OTT apps
2.5- Impact of OTT applications on smartphone users
2.6- Impact of OTT apps on mobile operators
2.6-1. Reduction in growth of SMS Messaging
2.6-2. Changes in income structure.
2.6-3. Customer relationship and brand loyalty
2.6- Strategies to address the OTT challenge
2.6.1- McKinsey&Company’s strategies to address OTT challenge
2.6.1.1- High-risk markets, traditional strategy
2.6.1.2- High-risk markets, aggressive strategy
2.6.1.3- Moderate-risk markets
2.6.1.4- Low-risk markets
2.6.2- A.T. Kearney’s strategies for addressing OTT challenge
2.6.2.1- Battleground 1: Mobile Voice
2.6.2.1.1- Introducing “smart” plans
2.6.2.1.2- Create differentiated quality positioning
2.6.2.1.3- Launch an OTT solution
2.6.2.2- Battleground 2: Messaging
2.6.2.2.1- Leverage defensive SMS plans
2.6.2.2.2- Change the paradigm in subscriber identity module (SIM) connectivity and move to M2M.
2.6.2.3- Battleground 3: Media
2.6.2.4- Battleground 4: cloud services
2.6.3 – Kineto’s strategies to address OTT challenge
2.6.3.1- Block
2.6.3.2- Bundle
2.6.3.3- Joyn
2.6.3.4- OTT partner
2.6.3.5- Private label
2.6.3.6- Deploy own
2.7. Addressing the OTT challenge in the US
2.8. Addressing the OTT challenge in France
2.9. Addressing the OTT challenge in Spain, Korea and Japan
3- Methodology
3.1. Research design and approach
3.2- Study setting
3.3- Population and sample
3.3.1. The population
3.3.2. The sample size
3.3.3- Sampling approach
3.3.4- Selection criteria
3.4. Data collection method
3.4.1. Source of data
3.4.2. Data collection instrument and design
3.4.3- Piloting of data collection instrument
3.5.4. Data collection procedure, data processing, and analysis
3.5.4.1. Data collection procedure
3.5.4.2. Data processing and analysis
4- Results and analysis
4.1- Response rate
4.2- Research related questions
4.3.1- Average expenditure on calls/SMS and internet per week.
4.3.2- Frequency of “Top up” for voice calls/SMS and internet.
4.3.3- Preferred option for internet access.
4.3.4- Preferred option for SMS messaging.
4.3.5- Do you have a smartphone?
4.3.5- OTT applications installed on smartphones.
4.3.6- Most used OTT application.
4.3.7- Number of SMS messages sent per week.
4.3.8- Number of text messages sent per week with OTT apps.
4.3.6- Number of voice calls made per week with OTT apps.
4.3.6- Number of voice calls made per week.
5- Conclusion
5.1- Recommendations
5.2- Further research
Objectives and Core Topics
This research aims to investigate and measure the effectiveness of strategies implemented by mobile network operators in developing economies to mitigate the revenue impact caused by the adoption of Over-The-Top (OTT) mobile messaging applications.
- The shifting behavior of smartphone users from traditional SMS to OTT messaging platforms.
- The impact of data and SMS bundles on operator revenue sustainability.
- The correlation between smartphone penetration rates and the erosion of traditional telecommunication service usage.
- Evaluation of defensive strategies such as bundling, IP-based communication platforms, and usage-based pricing models.
Excerpt from the Book
2.4.1- SMS VS. OTT apps
SMS or Short Messaging Service is a ubiquitous capability built into the GSM wireless standard which allows text messages of 160 ASCII characters, to be sent to and from any GSM mobile handset, regardless of the service providers (Karen Church et al., 2013). SMS has since progressed to include messages containing image, video and sound content (Karen Church et al., 2013). In 2010, 6.1 trillion SMSs were sent, which translates into an average of 193000 SMS per second (Wikipedia, 2013). In 2010, SMS has become a gigantic commercial industry, earning $114.6 billion globally (Wikipedia, 2013). However, SMS provided by mobile operators are being challenged by alternative messaging services available on smartphones with data connection (Wikipedia, 2013).
OTT applications on the other hand such as Whatsapp, Viber, BBM, Facebook Chat, etc, allows smartphone users to send and receive image, video, audio and location-based messages to/from individuals or groups of friends at no cost (Karen Church et al., 2013). OTT applications require a mobile internet connection to function and both parties must have the same application on their smartphones in order to communicate or share data with each other (Karen Church et al., 2013). OTT apps also provide additional social information to the users. For instance, users can see when their friends are online, when their friends are typing; and the profile pictures of their friends, etc (Karen Church et al., 2013). OTT apps also keep record of previous conversations, they are not limited in the number of characters, they provide notifications, and users can send a voice message rather than a text message (Karen Church et al., 2013). In a nutshell, OTT applications add more value and convenience to text messaging than SMS does. OTT apps like WhatsApp for instance have over 350 million monthly active subscribers, 400 million photos are shared each day and the messaging system handles more than 10 billion messages each day (The Verge, 2013; The Guardian, 2013). OTT apps like WhatsApp are very often the main reason why subscribers purchase smartphones.
Summary of Chapters
1- Introduction: Provides the context of the study, highlighting the global proliferation of smartphones and the subsequent rise of OTT applications that threaten traditional mobile operator revenues.
2- Literature review: Analyzes the drivers of OTT application usage, the impact of smartphone penetration on telecommunications, and explores various industry-standard strategies to counter the OTT threat.
3- Methodology: Outlines the research design, which utilized a quantitative approach, including data collection via questionnaires from 400 pre-paid subscribers in Accra, Ghana.
4- Results and analysis: Presents the empirical findings from the survey, examining subscriber expenditure patterns, preferences for data bundles versus Pay-As-You-Go, and the frequency of OTT app usage.
5- Conclusion: Summarizes the research findings, concluding that while OTT apps are heavily used in Ghana, the threat to voice revenue remains low, and provides recommendations for future operator strategies.
Keywords
OTT applications, Mobile Network Operators, SMS, Data Bundles, Smartphones, Ghana, Telecommunications, Revenue, Average Revenue Per User, ARPU, Usage-based pricing, Market trends, Digital services, User behavior, Connectivity
Frequently Asked Questions
What is the core focus of this research?
The research examines the effectiveness of strategies used by mobile network operators in developing economies, specifically Ghana, to counter the revenue loss caused by OTT messaging applications.
What are the primary themes discussed in the paper?
Key themes include the shift from SMS to OTT messaging, the impact of smartphone adoption on telecommunication business models, and the evaluation of defensive strategies such as bundling and IP-based services.
What is the primary objective of the study?
The main objective is to measure how effective the measures taken by mobile operators in Ghana are at mitigating the impact of OTT applications on their revenue streams.
What research methodology was employed?
The researcher used a mixed descriptive and explanatory design with a quantitative approach, gathering primary data through self-administered questionnaires distributed to 400 pre-paid subscribers in Accra.
What does the main body of the work cover?
The main body covers a comprehensive literature review of global OTT trends, detailed strategies proposed by organizations like McKinsey&Company and A.T. Kearney, and a specific empirical analysis of the Ghanaian telecommunications market.
Which keywords best characterize this work?
Key terms include OTT applications, mobile network operators, data bundles, smartphone penetration, revenue sustainability, and telecommunications strategy.
How does the usage of OTT apps in Ghana compare to SMS?
The study found that while OTT app usage for text messaging is high among smartphone users in Accra, traditional voice calls are still heavily utilized, suggesting the threat to voice revenue is currently low.
Why are SMS bundles considered inefficient against OTT apps?
The study reveals that SMS bundles are often limited to on-net communications, whereas OTT applications offer broader, cross-network functionality, leading users to prefer Pay-As-You-Go models or alternative apps.
What does the author recommend for mobile operators in Ghana?
The author recommends transitioning networks to 3G/4G, integrating the Joyn community platform, and potentially investigating the feasibility of usage-based pricing to better compete with OTT providers.
- Arbeit zitieren
- Luc Olou (Autor:in), 2014, Measuring the Effectiveness of the Strategies used by Mobile Operators in Developing Economies, to address the OTT Challenge, München, GRIN Verlag, https://www.hausarbeiten.de/document/288279
