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Summary:
OTT in Palestine has its positive and negative impacts on operators, which has created a variety of issues and growth of opportunities, such as the following:
Issues:
o The diverse variety of Voice OTT applications severely cannibalized the traditional voice service over the different destinations, where voice traffic originating over the fixed line operator has declined by a total of more than 59% over the past 5 years. In addition, incoming voice traffic decline by a total of 42% over a period of five years.
o Increased the cost on operators as most of OTT applications (voice and video) are free don’t generate revenues for service providers. In Palestine, over the past 5 years, service providers were required to expand their backhaul by more than 50% yearly on average, resulting in a significant increase in cost of services delivered to the end customer.
o Due to the lack of 3G services in Palestine, OTT free services are cannibalizing the GSM traditional services revenues.
Opportunities:
o The wide spread of OTT digital content has created a need for higher broadband speeds and has contributed to a slight increase in operators’ revenues. The average speed in Palestine has increased by a factor of 5.5% over the past five years, while total internet volume consumed by customers has been growing by a yearly average of 33% since 2012.
o The migration from text based content to bandwidth, demanding video based content, has increased the dependence of subscribers over fixed broadband and has limited the effect of substitution by mobile broadband.
Currently, there are no restrictions or regulations in Palestine over OTT. Content in general is an unregulated VAS, and any operator can develop and offer content services, such as OTT TV, web and mobile applications, as well as other services. The absence of measures to protect intellectual property has resulted, on one side, in the availability of pirated content available over different platforms for the end user, while on the other side it has made developers reluctant to create any content customized for local subscribers. The majority of OTT apps are calming to have high standards, in regards to privacy and data security, however, until now the end user has not been involved technically enough to fully comprehend the threats and associated breaches for using such apps.
With the absence of regulation over the OTT apps, in terms of entry and exist, the associated quality, pricing structure, and dynamic nature of OTT will constantly shift the deck towards OTT apps providers leaving operators with no choice but to fulfill the increasing needs of subscribers in terms of bandwidth. Therefore, it is necessary to create a more balanced environment, through which regulators should interfere by embracing one or more of the below options:
o Allow operators to request a share from the revenues for the services offered over their network in return of not blocking a specific OTT app;
o Push OTT providers to host their services at the operators’ networks or peer their services with the operators in order to reduce the additional cost carried by the operators;
o Force OTT apps providers to pay taxes for the services offered in their countries.
As such, cooperation can be achieved, but not limited to, through the means of branding, revenue sharing models, profile sharing, bundling OTT services, along with 3G bundles, big data monetization, and so on. And due to the dynamic nature of the OTT industry and the low entry barriers for new players, it has become easy for new potential players to imitate and/or substitute services, in which, this has led to most partnership models, between OTT and operators, to not succeed. However, a win-win partnership approach, such as white labeling or service hosting for OTT applications (mainly video content), can be used as a successful relationship method.
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