How to Respond to OTT Bypass

Last week I described a serious new problem for operators, based on the advice of Paul David, Chief Commercial Officer of Revector. I am calling this issue ‘OTT bypass’ because nobody else seems to have given a name to it. In summary, OTT bypass is a hybrid of the legal ‘over the top’ model with the illegal international bypass model, where a call originates as a traditionally dialed voice call, but is taken on a detour and terminated to the OTT app on the end user’s smartphone.

OTT bypass may initially seem good for carriers because they will do deals with OTT providers to terminate calls more cheaply, but the carriers will ultimately lose more because of the reduction in terminating traffic on their networks. Carriers will also be encouraging the migration of traffic from their voice network to their data network, leading to higher capital costs. OTT bypass may also seem good for customers, if telcos pass on the benefits of lower wholesale rates. However, customers pay their fees in the expectation they receive calls for free, and they may not be happy to find their data allowance is being consumed by the OTT termination leg of the calls they receive. In addition, the originating customer has chosen to dial a number instead of using an OTT service, so they may feel cheated because they have received an inferior service to the one they thought they were paying for.

Paul and the Revector team have been working on an innovative response to protect telcos from OTT bypass and to keep traffic on voice networks. They are currently partnering with customers to develop new techniques which have been developed in the lab, and are being experimented with in the field. Obviously, the details are commercially sensitive. However, Paul has given me permission to share a broad outline of how telcos might counter the threat posed by OTT bypass.

Switch off OTT?

A radical response to OTT bypass might involve disabling all OTT services, denying customers the ability to make calls via Skype, Viber etc. This would also make OTT bypass impossible. However, it might be illegal for the telco to do that! Governments are increasingly keen on net neutrality, and there may be laws in place that prevent telcos from taking such action. And even if such a response were legal, it may cause more harm than good. OTT apps are popular with customers, and the indiscriminate curtailing of OTT services will likely lead to widespread criticism. If the government has not already enforced net neutrality laws, it may be motivated to impose them in order to appease unhappy customers.

This leads to a difficult question: what are operators legally allowed to do, which might discourage a downward spiral of more traffic being terminated via OTT bypass? Paul tells me that Revector is working on a legal strategy that compliments their expertise with technology and bypass detection. Whilst switching off an OTT service might be against the rules, operators generally have the legal right to manage the quality of the service they offer on their networks. So if a data network is being swamped by OTT traffic, there is good reason to ensure the network continues to function, despite the burden being placed upon it.

Detecting OTT bypass

In order to respond to OTT bypass, you need to know if it is taking place. This is not straightforward. OTT bypass is technologically complicated to detect. However, Revector believe they have the tools to identify the number of calls being hijacked, and also to identify the ‘shape’ of OTT packets, and thus identify when calls are originating normally but terminating on an OTT app. In part, these techniques augment Revector’s established strength in using test calls to detect traditional bypass.

Revector’s solution was successfully tested in the lab a while ago. They are now working with partner organizations on deploying these methods in the real world, with a view to releasing a commercial product. So now is not the time to talk at length about how to detect OTT bypass, but if it can be detected, operators will have a fighting chance to mitigate the impact of hijacked calls, without hurting the customers who chose to use OTT services.

The painful legal bit

I know some Commsrisk readers prefer to read and learn about technology, rather than the law. Given the way some laws are written, I do not blame them! However, Commsrisk has evolved to deal with both the technological and legal aspects of the risks faced by modern telcos, and OTT bypass is a great illustration of why they need to be covered together, with a holistic understanding of the connections between technology and law.

The most extreme net neutrality advocates want to ban any prioritization of traffic on data networks – even if that means somebody has their real-time health monitoring service interrupted to make way for a video of a kitten falling over. OTT bypass is a great illustration of why the naive and simplistic reasoning that drives the net neutrality lobby will not deliver the best results for customers. Nobody wants to see price wars driven by OTT bypass that lead to significantly inferior call quality because data networks are overloaded with traffic, whilst voice networks are laying idle. OTT bypass will be a key issue in defining the battle lines for net neutrality. If operators have the opportunity to fairly discriminate against OTT bypass, then the net neutrality laws are reasonable. If the net neutrality laws permit no discrimination against OTT bypass, they spell disaster.

Telcos must repeatedly learn about new threats to their business models. Just as we need to educate ourselves about the implications of new technology, we recognize that others also need education. Teaching legislators about the consequences of OTT bypass is a necessity. It would also help to educate the wider public, before they get upset about their data allowance being consumed by receiving OTT bypass calls, or they complain about the drastic drop in quality when they call a particular relative in a foreign country. Telcos need to build consensus for sensible rules that ensure customers get a fair and transparent deal, so if they pay for a voice call they get a voice call, and are not being tricked into accepting a half-voice, half-OTT call instead.

The target market for OTT bypass detection

There are two kinds of customers for OTT bypass detection. They can be split between the originators, and the terminators.

Starting with the originators, enterprise customers often pay a premium for guaranteed quality. They do not want to arrange an international conference call and find it is impossible to understand what the people on the far end are saying. These customers need to be protected – or the customers need to protect themselves. Telcos would be wise to do testing to ensure no carriers are cheating by sneakily using OTT bypass to reduce costs. The biggest enterprise customers may commission independent tests to be performed on their behalf.

At the terminating end of the deal, operators need to understand what drives the load on their networks. We can anticipate that voice traffic will decline whilst data traffic will rise. But within this greater narrative they also need to pick out how much of the transition is occurring because of factors like OTT bypass. As with so many risks, prevention is usually better cure, and to be forewarned is to be forearmed. Operators should seek to measure the impact of OTT bypass before it becomes really big – because it is easier to retain the business they already have than try to win it back after it has been lost.

In addition, monitoring will help telcos to educate legislators about the scale of the risk posed by OTT bypass. Governments that tax international call termination should want to know about OTT bypass anyway, because it will reduce their revenues too. Given that some countries are buying national revenue assurance systems to protect inbound traffic revenues, they should be adding OTT bypass detection to their long lists of requirements! However, telcos will usually need to lead the way, and explain the issues. Most governments and regulators are better at criticizing telcos than identifying the real root cause of problems. It is up to telcos to proactively monitor the growth of OTT bypass into their countries, so they can make the argument for safeguarding the substantial investments made in building networks and acquiring radio spectrum licenses, whilst also advising on how to protect the recipients of OTT bypass calls from being abused.

My hunch – OTT bypass is a risk which should not be underestimated

Risk managers are meant to be studious people, who use data and numbers to analyze risk objectively. I agree with that. However, as a former risk manager, I recognize that there is not enough time in the day to fully quantify every possible risk. Sometimes you have to rely on instincts as your first filter, picking out the issues where you currently know nothing but decide you have to learn more because the potential downsides to the business are so great. A few weeks ago, OTT bypass was not even on my risk radar – it was an ‘unknown unknown’ for me. Now it is a ‘known unknown’, and I know enough to be very worried about the potential scale of the impact on operators. I have no data, but my hunch is that any investment in monitoring and evaluating the scale of OTT bypass will pay off.

Operators already face a perfect storm of falling voice revenues, commoditization of services, net neutrality burdens, and the uncontrollable cost of upgrading data networks to keep pace with demand. OTT bypass has the potential to turn a storm into a hurricane. We need data on OTT bypass, and we need it now. If Paul is correct about how much traffic will take a detour and terminate as OTT bypass, then operators should be worried. They need new tools to protect themselves. We will seek to keep you informed, as those tools are developed.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.