Viber CEO takes on carriers' over-the-top attack. Could this be the beginning of a "revolution" !?

Editor comment: The discussion around Joyn market presence/ evolution, OTT and the competition between mobile operators has been on the TOP board. Could these news be the beginning of a larger partnership !? Like Deutsche Telekom and Spotify !? Should Joyn and OTT have the same level of QoS if the a partnership is created !?

Over-the-top services like Skype voice calls or Viber messaging sap carrier revenues. But Talmon Marco said users are just going where the innovation happens.

Carriers love to bash companies like Skype and WhatsApp that provide services on top of their mobile networks at the Mobile World Congress trade show. But one thing was different this year: Viber Media founder and Chief Executive Talmon Marco entered the lion's den to defend the idea.
Viber's free messaging service, which competes directly with carriers' own high-profit services for text- and multimedia-messaging services, is a prime example of the despised over-the-top (OTT) approach. Marco showed no remorse for sapping telco revenues and argued that users are just moving to where the innovative, useful services are taking place.

"There's no difference between the SMS of 1993 and 2013," Marco said, whereas in the two years since its launch, Viber has added group messaging, delivery confirmation, indicators that the other person is typing, location sharing, and high-quality photos. "We delight our users with cool new features." He backed up his case with the example of Monaco, 90 percent of whose 35,000 population uses Viber -- even though SMS is free in the country.
Marco spoke immediately after two telco chief executives, Deutsche Telekom's Rene Obermann and KT's Suk-Chae Lee, told of their unhappiness with OTT services. Carriers are held back by regulations that don't apply to OTT providers, for example. Obermann described how OTT companies see their relationship to carriers: "You invest, we take the profit." He and his peers have been saying this for years at this show and others, but he thinks sooner or later something has to give.
"It's not sustainable that the network makes all the investments and others just get a free ride," he said.

Lee said OTT services are bleeding away the business of KT, the largest mobile operator in South Korea, because it must invest more and more into its infrastructure but it doesn't reap the rewards.
"In the last four years, KT revenue has stagnated, but capex [capital expenditure spending] has increased to $4 billion from $3 billion before," he said. "The builders of this cyberspace, the telcos, may have to watch the space be dominated by the giant Internet players or the OTTs."
That's a stark contrast to Viber's business. "Our whole infrastructure costs under $200,000 a month," Marco said. Marco suggested a path to reconciliation, though: partnership. He said he won't pay the telcos for free services, but he's willing to share revenue for paid services.
"We're definitely prepared to share revenues when we charge users," Marco said.

Already Viber pays a percentage of its revenue to the app stores that distribute his company's app, but a carrier could step in and do the distribution, too. "That's 30 percent of our future revenues up for grabs by carrier. Come and take it," Marco said. Obermann seemed open to the idea, pointing to a partnership Deutsche Telekom has with music-streaming service Spotify. "We have a revenue share," Obermann said. "Users love it, and we have growing number of subscribers." Lee sounded more skeptical. OTT companies, in the long run, hurt economies that are increasingly dependent on the Internet. "Nobody can stop OTT," he said. "The question is, if it creates an economic cost burden to society, then somebody must take the burden."

Source: http://reviews.cnet.com/8301-13970_7-57571275-78/viber-ceo-takes-on-carriers-over-the-top-attack/?goback=.gde_1890406_member_218231920

When the Amount of Internet Based Mobile Messages Equals SMS

Tyntec, a mobile interaction specialist, today released the results of a study conducted in association with GigaOM Research, naming 2013 as the year IP-based mobile messaging will equal the popularity and ubiquity of SMS. The research shows that nearly 10 trillion SMS and IP mobile messages will be sent in 2013, predicting parity for the first time. This follows a year of significant adoption in consumer-based Internet mobile messaging, driven in part by the global uptake of OTT (over the top) technologies such as WhatsApp and Facebook Chat.

The research, which can be downloaded here, shows that this trend is set to continue, with the number of IP-based messaging subscribers already surpassing SMS user numbers in 2012, and 1.8 billion users sending 15 trillion messages per year by 2016.

As users continue to migrate to lower cost messaging services for person-to-person (P2P) communication, they are forced to switch between IP-based messaging and SMS due to the lack of interoperability and inconsistent delivery associated with IP-based messaging. The report also shows that despite the popularity of newer IP-based messaging services, SMS will continue to grow by 5 percent CAGR until 2016. This growth is due in part to Internet companies, social networks and enterprises continuing to take advantage of SMS's ubiquity, interoperability and global reach for Application-to-Person (A2P) messaging. For example, Google relies on SMS in emerging markets to deliver emails and verify authentication. Similarly, mobile money applications use SMS to post transactions and social networking sites such as Facebook and Twitter, also use SMS to publish updates.

The report concludes that the growth of IP-based messaging and SMS solutions have ultimately reached an impasse and will be forced to converge as end-users continue to demand more streamlined messaging. GigaOm Research suggests that virtual phone numbers are a promising solution to the fragmentation, as these provide a universal identifier to seamlessly converge the two technologies.

Virtual phone numbers offer interoperability to IP-based messaging services enabling users to transmit and receive messages regardless of the delivery mechanism. For example, a WhatsApp user would traditionally have to close the app and send a message via SMS to a non-WhatsApp user. By utilizing virtual phone numbers, messages would be sent seamlessly between devices without the user having to worry about choosing the appropriate delivery technology (e.g. SMS, WhatsApp, iMessage) and consumers would benefit from a smoother and more satisfying user experience. Similarly, carriers can take advantage of the shifting market by actively promoting virtual phone numbers to OTT players. This would both enable and promote seamless global communication while providing carriers with an entry point to the OTT / cloud telephony market. This convergence of messaging technologies allows OTT players and carriers to leverage each other's strengths in the value chain, providing enhanced scalability, delivery and innovative interfaces for end users while mobile operators gain additional international, rich SMS and voice traffic revenues from the OTT and web 2.0 markets.

"The rapid uptake and flexibility of IP technology and the reliability and ubiquity of SMS messaging will keep these technologies both competitive and complimentary," said Peter Crocker, GigaOm Research analyst, founder and principal analyst at Smith's Point Analytics. "However, the advent of IP and new players is also creating fragmentation which is bad news for operators, Internet companies and users alike. Converged messaging through virtual phone numbers seems to be a natural way to address this problem because they provide a unique identity to enable interoperability and global reach for all parties."

"While IP-based messaging services such as WhatsApp are grabbing all the headlines because of their growth, it's important to remember that they share the same core purpose of SMS, convenient and reliable end-user communication," said Thorsten Trapp, Co-founder and CTO of tyntec. "By integrating the IP and mobile SMS world, companies can drive revenues and increase demographic and geographic reach quickly and simply. This is why virtual numbers will be so important in 2013 and beyond."

Source:  http://www.marketwire.com/press-release/new-research-shows-2013-as-year-when-amount-internet-based-mobile-messages-equals-sms-1748618.htm

The end of an era for SMS as IP-based messaging goes from strength to strength

The challenge for operators is to create a strong user experience and give subscribers little reason to go elsewhere.

SMS generated extraordinary profits for many years, but now looks unsustainable as smartphone penetration increases and a range of IP-based alternatives become available. Speculation concerning the fate of mobile operators' 'cash cow' is increasing. In Analysys Mason's recent report, Operator and OTT voice and messaging services in Western Europe: forecasts and analysis 2012–2017, we provide our outlook for the messaging market, for both legacy SMS and for emerging IP-based alternatives.

A large and increasing proportion of mobile users are adopting alternative messaging services, whether cross-platform messaging applications such as WhatsApp Messenger, or platform-specific services such as Apple's iMessage or RIM's BlackBerry Messenger. Usage within closed user groups is typically free of charge or for a low annual subscription fee, so the pricing of these services is clearly attractive in comparison with operator-provided SMS. Users are also attracted to added features such as presence. The greatest impact has been in countries where the SMS market is weak. According to our latest survey data, 63% of smartphone owners in Spain used alternatives at October 2012.1  Anecdotally, penetration in the Netherlands is at a similar level.

The ready availability of low-cost alternatives together with the prevalence of large, flat-rate SMS bundles means that messaging revenue for operators in most Western European countries will no longer increase. The SMS market in Western Europe is in decline: at a regional level, revenue has been falling since the fourth quarter of 2011. We believe that retail messaging revenue peaked in 2011 (see Figure 1) and will decline rapidly in most Western European countries thereafter. We are usually reluctant to forecast inflection points around the base year, in this case 2011. In the case of messaging services, we believe that this is well-founded.

Figure 1: Messaging revenue by type and its share of total mobile revenue, Western Europe, 2009–2017 [Source: Analysys Mason, 2013]

Overall, we expect messaging revenue to decline by 39% between 2011 and 2017. In Spain, which has the highest prices and the lowest volumes, we expect the level of messaging revenue in 2017 to be barely a quarter of what it was in 2011. Traffic substitution will be faster than revenue substitution because operators will continue to allocate revenue from bundles to messaging, regardless of actual usage.

Operators are belatedly investing in their messaging services in an attempt to retain some competitiveness. They are responding to the increased availability of alternatives by offering their own IP-based messaging services and are adopting three main approaches.

• RCS/joyn is specified by the GSMA and is the industry's official response. The service is typically rolled out as a co-ordinated operator response with interoperability as a marketable feature. This approach is gaining momentum in countries where the SMS market is under strong pressure and the argument for self-cannibalisation is easier to make.
• 'Telco OTT' services are proprietary services offered by operators following an OTT model. Services are either developed in-house (often with the help of a specialist vendor) or offered using a white-label service. Many operators are using 'telco OTT' services to address specific market niches that are seen as vulnerable to substitution. Some of the major players are experimenting with both RCS/joyn and 'telco OTT' approaches.
• Partnership with a provider of alternative messaging services is an option for many operators. The brand strength of the partner is chiefly used to support the operator's data proposition rather than bolster the existing messaging service. This approach particularly appeals to smaller, disruptive players with less exposure in legacy revenue.

Self-cannibalisation is becoming acknowledged as the preferred strategy for most operators as they revamp their messaging services to compete in a data-centric mobile market. The challenge for operators is to create a strong user experience and give subscribers little reason to go elsewhere. Despite these efforts, non-operator-provided OTT messaging services will continue to grow strongly from 2012 to 2017. We expect service penetration of smartphones to increase to nearly 60% in Western Europe by 2017, whereas we expect operator-provided IP-based services to reach around 35% of smartphone users in the same period.

Source: http://www.fiercewireless.com/europe/press-releases/end-era-sms-ip-based-messaging-goes-strength-strength