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The growing importance of social media platforms and apps as well as Internet voice applications has hit telecommunications firms hard, claiming a chunk of their revenue, OZIOMA UBABUKOH writes

The telecommunications industry in Nigeria, Africa’s largest economy, is projected to lose a total of N109tn ($386bn) in voice revenue to the growing usage of Over-the-Top Internet voice applications by 2018.

United Kingdom-based research and analytics company, Ovum, stated in a report that “the $386bn loss will accrue over a period of six years – between 2012 and 2018 – from Nigerian customers using OTT voice applications.”

Checks by The PUNCH show that the increasing rise of the OTT players who provide voice and Short Message Services, or apps such as WhatsApp, Skype, Facebook, BlackBerry Messenger and Viber, is currently eating deep into the voice revenue of telecommunications companies in the country by more than 50 per cent.

The impact of these new services is further explained in a report by Credit Suisse.

In the report, the multinational financial services company said, “Proliferation of Over-the-Top content services such as Skype and WhatsApp, among others, could trigger more than a whopping 50 per cent revenue hit on Nigerian telecoms companies’ voice services in the coming months.”

A report by the Nigerian Communications Commission also indicated that the OTT could be a threat to traditional telecoms model by licensed operators.

“To further worsen this issue, the traditional operators still have to make significant investments in upgrading their networks to handle the increasing volume of data generated by the same providers of OTT services,” the NCC report read in part.

The Executive Vice Chairman, NCC, Prof. Umaru Danbatta, at a forum with telecoms operators recently, ruled out licensing OTT, thereby foreclosing its regulation.

However, findings by our correspondent showed that the monthly revenue accruing to the telecoms operators from the provision of voice services to the owners of the over 151 million mobile telephone lines witnessed an estimated 31 per cent crash in six months.


According to findings, the aggregate voice revenue by the operators, including the Global System for Mobile Communications, Code Division Multiple Access and fixed networks fell from N241.6bn in December of 2015 to N166.4bn in June.

Experts say the OTT trend and the declining Average Revenue Per User occasioned by subscribers’ low purchasing power in the face of increasing cost of operations is responsible for the fall in operators revenue.

“Reduction in the ARPU has been partly traced to the emergence of the Over-the-Top players, which operators said are eating into their profitability potential,” the President, Association of Licensed Telecoms Operators of Nigeria, Mr. Gbenga Adebayo, said in an interview.

Analysts told our correspondent that while telecoms companies in Nigeria had become wary of the effect of such OTT platforms, the revenue loss was only going to get worse.

This was also the position of the Commonwealth Telecommunications Organisation at its OTT conference in London last month, where it said it was conducting a research into the dynamics that could stop the trend.

“The CTO’s plan is to carry out a study to understand the market dynamics and policy and regulatory challenges of Over-The-Top services, both in the context of their impact on traditional business models and of opportunities for innovation and stimulating economic growth,” it stated.

At the same time, major operators such MTN, Globacom, Airtel and Etisalat in the country’s $38bn telecoms market said they were also struggling to counter a trend in which the prices of basic voice and data services were declining.

MTN Nigeria said that OTT content services had a “cannibalising effect” on network operators’ voice and data revenue, because they provide “free” services, which duplicate services already provided by network operators such as voice calls and SMS.

According to the firm, a ready example is WhatsApp, which provides free instant messaging services as an alternative to text messaging services provided by mobile network operators.


“It (WhatsApp) has also launched a free voice service,” the company’s Public Relations and Protocol Manager, Mr. Funso Aina, said, adding, “The point to note in this argument is that OTTs allow users to send unlimited texts, images, video and audio messages free of charge, using their current data plans.”

According to him, the problem is that these services are provided using network infrastructure of the operators, but without commensurate compensation to operators.

Aina added, “At the same time, they are denying operators of revenue to grow their networks, thereby impacting on service delivery and long-term sustainability.

“For instance, to date, MTN has invested over $15bn in building its network in Nigeria. You can now imagine an OTT leveraging on the network to deliver its content without investing a kobo locally. The impact on revenue is huge.

“Furthermore, because these entities are not licensed, and because they have not built any infrastructure locally, they do not have the same costs as licensed operators.

“They do not pay taxes, they do not employ any people locally, and indeed, they have no local presence whatsoever, meaning they do not make any contribution to our economy and their services are denying those who make contributions of income.”

The MTN public relations manager stated that it was the view held by most within the industry, but noted that “at MTN, we are looking to find win-win solutions for all stakeholders.”

Aina, however, dismissed the allegation that some telecoms operators had continued to dispute a view that they were making enough money from their higher paying data services to offset the loss of voice and messaging revenue.

He explained, “Every service is provided at a cost, and we cannot subsidise one service through revenue from another; so, the argument as to whether loss of revenue from one is being offset by another is really not a fruitful argument.


“The important thing is that services must be produced efficiently and all stakeholders, including our customers, must get fair value for their investments.”

An analyst at Ovum, Mr. Emeka Obiodu, who shared Aina’s views, said, “The use of Voice over Internet Protocol will grow increasingly over the next five years to become the underlying technology for delivering voice over telecoms infrastructure.

“Blocking these services, entering into alliances, or trying to out-compete the OTT players are not going to stem the tide.”

Obiodu said that a number of factors drove the growth of the OTTs in global demand, including improvements in the availability and speed of broadband networks, the growing capability and affordability of wireless devices such as smartphones and tablets, and continued dominance of social media.

The Research Director, Gartner, Mr. Sandy Shen, said, “The impact seen today of the OTT VoIP services on the traditional revenue streams of telecoms is just the tip of the iceberg.

“The OTT chat apps such as WhatsApp and WeChat are putting more pressure on telcos than VoIP services because they offer social networks that retain user loyalty and stickiness. That is pushing people to go for smaller voice and text plans, though they still need a big data plan.”

PriceWaterhouseCooper, a global consultancy firm, however, said there was a way out.

It suggested that the telecoms operators should develop a successful strategic response to the rise of OTT competitors.

“They must first take stock of the considerable assets and capabilities they already possess and determine how they can leverage them in order to compete against, or work with the OTT players,” it stated.

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Ok

This is just the beginning, any sensible telecom company worldwide should be shifting its business model to data sale only.

what is good for goose is also good for the gander

God catch them.... # tongue out

E just dey begin!

contact 08062910669 for ur mtn, Etisalat and airtell data bundle , 1gb for as low as #600 , just incase

Na wa oooo

That is competition right there. Consumers should just sit back, relax and enjoy the show...lol

If you are afraid of your competition, by the way, and you think they are driving you out of business, this article is for you: http://www.nextnaijaentrepreneur.com/business-competition/ (How to win your competition every time)

Moneyyyyyyyyyyyyyyyyyyyyyy

CHIDIEBEREE:
The growing importance of social media platforms and apps as well as Internet voice applications has hit telecommunications firms hard, claiming a chunk of their revenue, OZIOMA UBABUKOH writes

The telecommunications industry in Nigeria, Africa’s largest economy, is projected to lose a total of N109tn ($386bn) in voice revenue to the growing usage of Over-the-Top Internet voice applications by 2018.

United Kingdom-based research and analytics company, Ovum, stated in a report that “the $386bn loss will accrue over a period of six years – between 2012 and 2018 – from Nigerian customers using OTT voice applications.”

Checks by The PUNCH show that the increasing rise of the OTT players who provide voice and Short Message Services, or apps such as WhatsApp, Skype, Facebook, BlackBerry Messenger and Viber, is currently eating deep into the voice revenue of telecommunications companies in the country by more than 50 per cent.

The impact of these new services is further explained in a report by Credit Suisse.

In the report, the multinational financial services company said, “Proliferation of Over-the-Top content services such as Skype and WhatsApp, among others, could trigger more than a whopping 50 per cent revenue hit on Nigerian telecoms companies’ voice services in the coming months.”

A report by the Nigerian Communications Commission also indicated that the OTT could be a threat to traditional telecoms model by licensed operators.

“To further worsen this issue, the traditional operators still have to make significant investments in upgrading their networks to handle the increasing volume of data generated by the same providers of OTT services,” the NCC report read in part.

The Executive Vice Chairman, NCC, Prof. Umaru Danbatta, at a forum with telecoms operators recently, ruled out licensing OTT, thereby foreclosing its regulation.

However, findings by our correspondent showed that the monthly revenue accruing to the telecoms operators from the provision of voice services to the owners of the over 151 million mobile telephone lines witnessed an estimated 31 per cent crash in six months.


According to findings, the aggregate voice revenue by the operators, including the Global System for Mobile Communications, Code Division Multiple Access and fixed networks fell from N241.6bn in December of 2015 to N166.4bn in June.

Experts say the OTT trend and the declining Average Revenue Per User occasioned by subscribers’ low purchasing power in the face of increasing cost of operations is responsible for the fall in operators revenue.

“Reduction in the ARPU has been partly traced to the emergence of the Over-the-Top players, which operators said are eating into their profitability potential,” the President, Association of Licensed Telecoms Operators of Nigeria, Mr. Gbenga Adebayo, said in an interview.

Analysts told our correspondent that while telecoms companies in Nigeria had become wary of the effect of such OTT platforms, the revenue loss was only going to get worse.

This was also the position of the Commonwealth Telecommunications Organisation at its OTT conference in London last month, where it said it was conducting a research into the dynamics that could stop the trend.

“The CTO’s plan is to carry out a study to understand the market dynamics and policy and regulatory challenges of Over-The-Top services, both in the context of their impact on traditional business models and of opportunities for innovation and stimulating economic growth,” it stated.

At the same time, major operators such MTN, Globacom, Airtel and Etisalat in the country’s $38bn telecoms market said they were also struggling to counter a trend in which the prices of basic voice and data services were declining.

MTN Nigeria said that OTT content services had a “cannibalising effect” on network operators’ voice and data revenue, because they provide “free” services, which duplicate services already provided by network operators such as voice calls and SMS.

According to the firm, a ready example is WhatsApp, which provides free instant messaging services as an alternative to text messaging services provided by mobile network operators.


“It (WhatsApp) has also launched a free voice service,” the company’s Public Relations and Protocol Manager, Mr. Funso Aina, said, adding, “The point to note in this argument is that OTTs allow users to send unlimited texts, images, video and audio messages free of charge, using their current data plans.”

According to him, the problem is that these services are provided using network infrastructure of the operators, but without commensurate compensation to operators.

Aina added, “At the same time, they are denying operators of revenue to grow their networks, thereby impacting on service delivery and long-term sustainability.

“For instance, to date, MTN has invested over $15bn in building its network in Nigeria. You can now imagine an OTT leveraging on the network to deliver its content without investing a kobo locally. The impact on revenue is huge.

“Furthermore, because these entities are not licensed, and because they have not built any infrastructure locally, they do not have the same costs as licensed operators.

“They do not pay taxes, they do not employ any people locally, and indeed, they have no local presence whatsoever, meaning they do not make any contribution to our economy and their services are denying those who make contributions of income.”

The MTN public relations manager stated that it was the view held by most within the industry, but noted that “at MTN, we are looking to find win-win solutions for all stakeholders.”

Aina, however, dismissed the allegation that some telecoms operators had continued to dispute a view that they were making enough money from their higher paying data services to offset the loss of voice and messaging revenue.

He explained, “Every service is provided at a cost, and we cannot subsidise one service through revenue from another; so, the argument as to whether loss of revenue from one is being offset by another is really not a fruitful argument.


“The important thing is that services must be produced efficiently and all stakeholders, including our customers, must get fair value for their investments.”

An analyst at Ovum, Mr. Emeka Obiodu, who shared Aina’s views, said, “The use of Voice over Internet Protocol will grow increasingly over the next five years to become the underlying technology for delivering voice over telecoms infrastructure.

“Blocking these services, entering into alliances, or trying to out-compete the OTT players are not going to stem the tide.”

Obiodu said that a number of factors drove the growth of the OTTs in global demand, including improvements in the availability and speed of broadband networks, the growing capability and affordability of wireless devices such as smartphones and tablets, and continued dominance of social media.

The Research Director, Gartner, Mr. Sandy Shen, said, “The impact seen today of the OTT VoIP services on the traditional revenue streams of telecoms is just the tip of the iceberg.

“The OTT chat apps such as WhatsApp and WeChat are putting more pressure on telcos than VoIP services because they offer social networks that retain user loyalty and stickiness. That is pushing people to go for smaller voice and text plans, though they still need a big data plan.”

PriceWaterhouseCooper, a global consultancy firm, however, said there was a way out.

It suggested that the telecoms operators should develop a successful strategic response to the rise of OTT competitors.

“They must first take stock of the considerable assets and capabilities they already possess and determine how they can leverage them in order to compete against, or work with the OTT players,” it stated.