OTT Bypass Is Biggest Threat to Mobile Operators, Says Revector Survey

Revector CEO Andy Gent has posted a graph to social media which suggests over 55 percent of mobile operators consider OTT bypass to be the biggest threat they face. This follows a recent Revector blog which claimed:

…almost 60 per cent of operators believe that OTT bypass is the single biggest threat to revenues.

The figures reportedly come from a survey commissioned by Revector, though details are scant. We can assume the survey is skewed towards existing and potential customers of Revector’s anti-fraud test call systems; a further 32 percent of respondents say simbox fraud is their greatest risk. Between simbox fraud and OTT bypass that means roughly 90 percent of mobile operators supposedly believe their biggest risk can be addressed with one of Revector’s niche anti-fraud solutions. This is not consistent with reports about the most widespread causes of fraud per organizations like the CFCA.

Obviously there are other big threats to telcos, some of which make national and international headlines. These include massive compliance fines, privacy breaches that devastated share prices, and risks which are not specific to telcos but which many suffer due to historic factors, such as the enormous pension deficits of corporations formerly owned by the state. I would not expect a typical fraud manager to think about these risks, which is why the survey showed some telcos consider equipment theft to be the biggest risk (though how is this a risk to revenues?) whilst none name mega-mergers between telcos and media firms as a threat. However, it is good that fraud managers are aware of OTT bypass and take it seriously. What is less clear is whether they intend to do anything about it.

Revector is keen not just to mention the impact of OTT bypass on termination revenues, but also on customer satisfaction.

A year-on-year decline in revenues has coincided with an increase in customer complaints, with 90 per cent of operators reporting poor call quality as the reason for most customer complaints.

That sounds like an exaggeration to me. Some people are worried about the wider impact of OTT for the opposite reason: because customers find the quality of OTT voice services to be so good.

My own data leads me to conclude that OTT bypass is the hottest topic in RAFM. However, I do not hear much useful talk about the ways telcos can mitigate the associated risks. Is the industry paralyzed, or do telcos choose to keep their response secret? Perhaps the real issue is that RAFM functions have managed to obtain increased investment for a while, but failed to secure increased influence. If you attempt to solve every problem with back-billing, access controls, disconnecting SIMs or data fixes then an issue like OTT bypass will leave you impotent. We need to connect bad news messages from niche risk silos to the conversations taking place at a higher level of risk management, so the impact of OTT bypass is neither ignored nor exaggerated.

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.

2 Comments on "OTT Bypass Is Biggest Threat to Mobile Operators, Says Revector Survey"

  1. Avatar Tom Wilson | 31 Oct 2016 at 9:29 am |

    The survey can be a bit biased if you think of where the issues are being discussed, for this activity is well known by now. Its not just bypass by the OTT’s either that is effecting the operators. The pure madness of having non revenue bearing traffic congest the network is something that other business sectors surely would not allow to be a part of the business model. The axiom standard of the Telco’s however is tradition and that they should bear all the costs has to change and change now
    . Of course, this is a particular problem for the operators and as such, its growing each month, and not on a linear scale. One client saw in a very small sample of data, 61% bypass to just one App, so the issue is here and now. The issue of risk mitigation and monetization are key here, not just the old block it and be damned. Operators business models are a a high risk of being shunted. Revenue sliding over to the OTTs (traditionally earned by the operators) while investment is the standard burden of the Telco operators. In a previous life, I was a direct accomplice to findings where the operators are bearing investment cost of $340 Billion average per year, most in infrastructure. Operators bear the cost of licenses, spectrum, investment in infrastructure, customer care (tell me, how many people can get any noteworthy help from Google or Yahoo or others when there are issues, especially at the consumer level) and local sales and taxes. So the shift in revenue has greatly harmed the operators. Risk mitigation is not just to block either. In the older days (just a couple years ago), the tendencies were to block first, then create content and then finally partner. The environment is different now. Risk mitigation takes on many different faces than blocking now. Monetization of network infrastructure is key and this is something we are working on rather than just detection and blocking. As Eric stated, there has to be something more or the operator’s revenues will whither away, costs continue (blame regulators for keeping licensing and spectrum costs so high and not helping to shift the burden over to the revenues) should they not adapt.

    • Avatar Ahmad Nadeem Syed | 20 Nov 2016 at 2:39 pm |

      OTT is a reality. Putting artificial barriers will not help the operators, no matter how many surveys we conduct and draw conclusions. The telecom industry should take this as an opportunity and come up with products and monetize the same.

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