Introduction to OTT
The term OTT or “over-the-top” refers to the delivery of content or services over an infrastructure that is not under the administrative control of the content or service provider. Originally it referred to the delivery of audio and video content, but more recently the definition has been extended to include any service or content and in a more general sense means any service available on the Internet.
The term came about as a result of more traditional telecom services coming under competition from content and service providers offering similar solutions using web services methods. Recently, over-the-top is wrongly used in the telecom world to describe any unmanaged service delivered over IP. If an operator offers an IP service (say IPTV), and that service is delivered over the operator’s infrastructure (whether mobile, fixed, or otherwise), it is not OTT. If that same operator, after building a content/service model, extends the service to any IP end point on another operator’s network, then it becomes OTT. Whether the operator decides to use QoS for the service is irrelevant in the definition of OTT. In other words, an operator offering a service to its own subscribers is never OTT; rather if quality and bandwidth are enforced, it is a managed telco service, and if not, it is an unmanaged telco service. Only if it is extended beyond the boundaries of that telco’s infrastructure is it ever correctly referred to as OTT.
Traditional telecom services, specifically voice and SMS, have come under incredible pressure from OTT service providers that include VoIP, social networking, IPTV, and streaming audio. According to several projections, OTT messaging (by messages sent) is expected to surpass SMS messaging in 2013. As operators look to grow revenue in the face of declining voice and SMS, they are forced to turn to data service to supplement losses. As such, operators are investing considerable time and money investigating offering similar web services models for next generation voice and messaging.
The business models for web OTT and telco OTT are vastly different. Simply put, web OTT players make money either directly from the sale of the content or service they are offering, or from advertising. Advertising based models tend to have a higher churning subscriber base as users jump from one service to another. Meanwhile, telcos do not view OTT as a sustainable business on its own. Rather, they use it to leverage their core business of selling data, and as such any telco OTT strategy is meant to create a walled garden, whether by altogether limiting the content and service to only their subscribers, or offering a better quality of service to only their subs.
The success of OTT is founded in being location and technology agnostic, and transferrable. This means the subscriber has a relationship with the OTT provider directly and is free to access his subscription from any location, at any time, and ultimately over any access technology.