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May 29, 2015 | Authored by: Vindicia Team

New report says OTT players can hurt telcos voice revenues

With over-the-top options, like Skype and Whatsapp, some consumers don't see the need to use traditional telcos services to make phone calls anymore. According to a recent Credit Suisse report, these OTT players are threatening traditional voice and messaging business of telcos revenues by as much as 50 percent.

The telecommunication companies in India are especially in trouble, as compared to Korea, U.S., Australia, Europe and China. Telcos in India still acquire more than 80 percent of their earnings from voice.

"OTT players are hurting telcos voice revenues."

"The problem is one of arbitrage. Truth is licensed mobile operators are fighting a losing battle against unlicensed substitutable services like voice, messaging and video messaging services from the OTT players," Rajan Mathews, director general of Cellular Operators Association of India, told The Economic Times.

It's pretty easy to see why consumers are choosing to make their voice calls over the Internet: It's much cheaper. During a voice call, a telecom operator earns approximately 35-36 paise {Indian currency} a minute while a call through a mobile app gives the company just 6 paise a minute.

If telecom carriers want to retain their customers, they can't raise their voice rates. They can, however, make up for the loss in revenue by increasing their data rates three to six times.

Since 3G networks and 3G smartphones continue to get bigger, the Credit Suisse report said the threat to telcos service will likely grow.

Can more regulation of OTT apps help telecom operators?

It's not surprising that telecom operators are upset about the business they are losing to OTT apps. According to The New Indian Express, some of these telecom companies, like Vodafone and Airtel, even complained to The Telecom Regulatory Authority of India. TRAI is seeking to regulate these OTT apps better,and that could help telecom operators generate more revenue in the future.

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Vindicia Team

Vindicia Team

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