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Add to that fundamentally shifted user behavior the success of Skype. Throw in the proliferation of Google Voice. Add on other applications that cut into traditional revenue streams like Textfree (which enables texting for those with no text plan) and, from the same company, mobile VoIP app Pinger. Not only do you get a possible reduction in ARPU, you get a situation in which some users can opt to use an iPod Touch, plus some OTT apps, rather than an iPhone.
But there are, some may say, fundamental differences in user experience for OTT applications. As a whole, over-the-top providers lack the network visibility that traditional CSPs have. Furthermore, while subscribers may stick to low- or no-cost voice and video applications, QoS is a real problem, and that’s without even getting into net neutrality issues. (By the way, if you haven’t checked out Ed Finegold’s article on net neutrality
in this issue, it’s definitely worth a look.)
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The idea that the foes are becoming friends is an interesting development indeed. |
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CSPs and OTT plays.
However, there are reasons to believe that, at least on the video side, OTT plays may not be quite as disruptive as was once believed. Tal Givoly, Chief Scientist for Amdocs, sums up the potential reasons for the possibility for reduced divisiveness in his blog, noting that customer demand for OTT video alone, without pay TV, is still marginal, noting that what they really want is enhanced functionality with as little added complexity as possible.
Givoly also points out that there is a
clear reason for an alliance between
satellite players and OTT video plays,
since most of the OTT video will actually
be consumed across someone else’s
network. Also, IPTV players, who
generally own less paid content and
have a newer set-top box
environment, for the most part, have a
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And revenue continues to be an issue. Skype gets by with its SypeOut revenue, but as an IPO looms closer, revenue will increase as a concern. Meanwhile, ComScore’s formula for keeping track of OTT video ratings has undergone changes that have hurt providers, like Hulu, that depend on ad revenue to pull in their bucks. This summer, ComScore’s account of Hulu’s viewership plummeted from 43.5 million in May to 24 million in June, according to the LA Times, after the company revised its methodology.
In that same LA Times article, Tim Hanlon, a Chicago digital media strategist,
is quoted as saying, “It’s maddening. You would think 15 years on, we would be
in a better place. But we're still talking about fundamental discrepancies in
things like page counts." (Article here: articles.latimes.com
).
In addition, Google has hit an
uncommon snag (if you don’t count
that whole China thing) as its Google
TV service ran into opposition from
execs at the major networks over
business model protection, though that
story circles back to the issue that’s at
the heart of the struggle between
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rational interest in supporting OTT
video. That leaves cablecos who, once
their chief access-technology rivals
have fallen in line, will get on board
with OTT as a me-too maneuver. This
leads Givoly to predict that all TV
providers will have OTT video access
capabilities built into their set-top
boxes within the next few years.
And it is within this potential fusion that many of the core OSS issues associated with OTT services can be resolved. CSPs have the level of access to the network that can complete the QoS puzzle for OTT plays, and a visible partnership will eliminate the need to furiously protect networks against OTT revenue.
Going back to the Skype example, 560 million is a huge number, and this growth is in spite of the very quality issues that are central aspects of the arguments that OTT plays cannot truly replace traditional communications services. With skirmishes over net neutrality, network access, marketshare, and innovation raging, however, the idea that the foes are, in many cases, becoming friends is an interesting development indeed.
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