Data: The New Voice Minutes (Or learn to love OTT)
Once upon a time, the “phone” industry’s world revolved around billable minutes. Local minutes, long-distance minutes and the big cha-ching of international calling.
Today, the world is much flatter with the only real profit center in international, and even that’s diminished with independent providers trying to out-Skype (News - Alert) Skype on the cheapest calling rates. It is data, not voice, where “phone” companies are starting to look at for profits.
Both AT&T and Verizon (News - Alert) have eliminated the all-you-can eat data plans of old for mobile devices – tablets as well as smartphones – deciding they don’t need to compete with Sprint (News - Alert) for unlimited usage. In the data cap world, the customer pays more by exceeding the monthly data ceiling and buying more hundreds of MB or a couple of GB to tide them over until the beginning of the next cycle, or better yet, buying a larger ceiling at a higher price – depending on usage.
Is it any big secret in a mobile data-capped world that AT&T (News - Alert) is looking at billing for Apple FaceTime if it runs over a cellular network? AT&T will say they need to do this for better network management by “encouraging” users to run bandwidth-intensive apps over broadband-anchored Wi-Fi connections so as to not overtax the cellular network.
It may not go over too well; expect the cries of “Net Neutrality” to start again, not to mention tech reporters digging up all their old stories about poor AT&T cellular coverage in certain cities in the initial rollout of the Apple iPhone.
Much of this surrounds the rollout of LTE (News - Alert) and not enough available RF spectrum, but at the end of the day, both AT&T and Verizon are walking a tightrope of sorts between encouraging mobile broadband usage so consumers and businesses have to pay more for more data, and keeping usage within the boundaries of available RF spectrum in densely populated markets.
A lot of carriers have expressed concerns about over-the-top (OTT) services “stealing” business away from them. More specifically, it feeds into the broken idea that mobile voice minutes are still valuable in a world where we have unlimited local and long distance plans and roll-over, plus family shared-minutes plans.
It’s time to turn that idea on its head and realize that OTT services are actually revenue generators in a data capped world, precisely because they add to a customer’s monthly usage. OTT usage is not “stealing business,” but has the potential to add revenue to the bottom line if it contributes to “overages” that encourage customers to buy more data.
Will traditional phone companies realize OTT usage could result in better profits? If they continue to encourage and talk up streaming video and videocalling, certainly a little voice OTT usage couldn’t hurt the bottom line in the new data usage profits world.
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Edited by Braden Becker