The state of OTT and content services in the USA vs.

Europe P a g e |1
The state of OTT and content services in the USA vs. Europe P a g e |2

TABLE OF CONTENTS
CONTENTS

Introduction ........................................................................................................................................................ 3

Key market players USA ...................................................................................................................................... 5

Key market players Europe ................................................................................................................................. 6

Key market players: OTT services ....................................................................................................................... 7

Key differences between US and European markets ......................................................................................... 8

RCS launches USA vs Europe .............................................................................................................................. 9

Regulation and legal landscape US ................................................................................................................... 11

Regulation and legal landscape Europe ............................................................................................................ 12

Operator strategies for monetizing OTT ........................................................................................................... 12

How the top 5 US wireless service providers are monetizing OTT ................................................................... 13

How the top 5 european wireless service providers are monetizing OTT ........................................................ 15

TV Focus ............................................................................................................................................................ 17

Technology trends affecting OTT ...................................................................................................................... 18

Differences between US and European customers .......................................................................................... 21

Learn more at Monetizing OTT and Content Services ...................................................................................... 23

About Telecoms IQ ........................................................................................................................................... 24

The state of OTT and content services in the USA vs. Europe P a g e |3

INTRODUCTION
INTRODUCTION

A technology goes over the top (OTT) when it is
used on top of existing hardware and software.
OTT technology is an important step closer to the
end-user because the new technology controls the
user experience. The technologies that it leapfrogs
become less valuable, and over time they can
become commodities.
This is the challenge facing communications
service providers (CSPs) today. With the
introduction of the smartphone people suddenly
had the Internet in their pocket, not just a calling
and messaging device. This opened up the
potential for OTT service providers to offer
services via apps on smartphones, over the
network service being provided by the operators.
After smartphones came tablets and quickly we
had multiple screen requirements. Since the
Internet has become individual and mobile,
consumer demand for things like video content on
the go has increased rapidly. Consumers are
increasingly watching video content on their
smartphone or tablet, rather than on TV, often
using multiple services depending on their content
requirements. The list of OTT providers is growing
fast, and its not all about video content.
In the USA OTT can mean slightly different things,
however overall OTT content is text, video or
audio content that is delivered via an operators
internet connection but owned by a third party.
The issue with this for CSPs of course is that they
do not see the financial benefits of these services;
in fact they are faced with the costs as OTT and
content services increase in volume and popularity
because traffic on their networks is increases in
tandem.
The OTT landscape is rapidly evolving in both the
USA and Europe and as is often seen in these
instances of major market disruption there is a big
difference between the natures of the type of
companies involved. On the one hand you have
operators, established, large organizations where
change is harder to implement and on the other
you have young, nimble start ups who are able to
get new products and services to market quickly
and where innovation is essential to their DNA. In
the customers eyes these companies and their
apps are cool. They look good, generally do what
theyre designed to do, and they are easy to install
with no contractual obligation.
In the USA operators tend to use the customer
experience as their main differentiator within the
market, and as customers are connecting an ever-
wider range of devices to their home and mobile
broadband, a consistent quality of experience is
required for operators to keep hold of their
customers. Not only are operators seeing their
technologies being leapfrogged, they also have to
up their game in terms of the level of quality and
service they are providing to their customers.
Indeed they have had change thrust upon them. In
these interesting times this report looks at the
state of OTT and content services in the USA vs.
Europe.
The state of OTT and content services in the USA vs. Europe P a g e |4

OTT Statistics

YouTube now accounts for 24% of global mobile traffic, Facebook Chat consumes 22% of all
instant message-related mobile bandwidth, WhatsApp carries 5% of global messaging traffic,
and Netflix boasts over 40 million streaming subscribers

4.1 billion OTT messages sent daily (end 2013), vs 19.5 billion SMS

The global OTT market will reach a staggering value of $166.5 billion by 2016

By 2016, global smartphone penetration will hit 39% and an estimated 45% of these
smartphone users will be actively using OTT services

MARKETS OVERVIEW
Increasingly complex by nature due to the fast
development of new technologies and increasing
customer demand, the addition of OTT services
into the picture has not made the communications
industry any simpler.
The services that consumers and business require
can, and are, delivered by an increasing number of
players. For example cable TV companies can offer
broadband, phone services, cable TV, or even TV
OD (on demand). They can even partner with
other content providers to offer more content via
OTT services. With new players and services
popping up all the time the market complexity and
fight for pieces of the pie in both the USA and
Europe is ferocious.
The state of OTT and content services in the USA vs. Europe P a g e |5

KEY MARKET PLAYERS USA

Figure 1. Key market players, USA

The state of OTT and content services in the USA vs. Europe P a g e |6

KEY MARKET PLAYERS EUROPE

Figure 2. Key market players, Europe

The state of OTT and content services in the USA vs. Europe P a g e |7

KEY MARKET PLAYERS: OTT SERVICES

Figure 3. Key market players OTT services

The state of OTT and content services in the USA vs. Europe P a g e |8

KEY DIFFERENCES BETWEEN US AND EUROPEAN MARKETS

In the US in January 2014, one of the high courts

In many ways, the US is ahead of the European
market, with the idea of sponsored data and the
larger operators developing their own content
delivery networks (CDNs) to send out content to
their customers. European operators tend to
outsource.
ruled that Verizon would be able to charge
OTT/content service providers for prioritizing their
data traffic and ensuring a high quality for these
services. This could open up a big window of
opportunity for operators over the coming
months.

In other ways Europe is ahead of the US: Joyn, the
Rich Communication Suite (RCS) initiative is a
relatively new concept in the US, and up until now
the US operators have not explored OTT
messaging service partnerships to the same extent
that the European operators have done.
In direct contrast, in Europe the European
Parliament recently (April, 2014) voted to restrict
Internet service providers' ability to charge data-
heavy services for faster network access.

From our feature interview with Roberto Moctezuma, Co-Founder and

Board Member of Voxofon

What are the key differences between the US and European markets?

I think that in the US I see a lot more risk taking, I see for example the advent of flat rates - unlimited data,
unlimited messaging, unlimited minutes. And I believe that has allowed a lot of progress because when you
allow users to be free and say OK, you can use everything you want, then you can really see the shape of
the demand curve. You can really see what customers are trying to do and they can come up with tones of
new use cases.

When I look at the European market I think its extremely interesting because you see a variety of markets
with very different environments and you see a variety of use cases that typically you dont see in the US
because there are no such different environments there, so you see things, for example some of the services
that have been provided by some operators here, that have evolved to providing operator billing services
and payment services and advertising services and other types of experiments in different countries, its very
interesting.
The state of OTT and content services in the USA vs. Europe P a g e |9

RCS LAUNCHES USA VS EUROPE

The global RCS program launched by the GSMA is
designed to enable operators to enhance their
offering to customers and to retain relevance
within the new landscape. It is hoped that RCS will
provide the type of services that customers want
including better network connection - whilst also
enabling the continuation of operator-centric
messaging services through the evolution of
competitive applications.
RCS marks the transition of messaging and voice
capabilities from Circuit Switched technology to an
all-IP world.
It his hoped that RCS will enable operators to
generate new revenue streams but so far roll out
of RCS across the world has been slower than
scheduled.
As illustrated below, RCS is not yet widely adopted
or available in the USA. Europe is further along
but there is still a long way to go to achieve the
vision set out by the GSMA.

RCS LAUNCHES USA

Operator Country Launch date Note

T-Mobile USA November 2012 Branded as joyn.

Messaging Plus -
Sprint USA October 2013 built by Jibe Mobile.
The state of OTT and content services in the USA vs. Europe P a g e | 10

RCS LAUNCHES EUROPE

Operator Country Launch date Note

Launched the beta
Vodafone Spain 2012 version of RCS at
beginning of 2012,
branded as joyn.

Movistar Spain June 2012 Branded as joyn

First Branded
Vodafone Germany August 2012 as joyn. Since
November
2013 Message+.

Orange Spain November 2012 Branded as joyn.

Deutsche Telekom Germany February 2013 Branded as joyn.

(T-Mobile)

Orange France June 2013 Branded as joyn.

REGULATION AND LEGAL

ISSUES: USA VS EUROPE
One of the key differences between OTT and
managed services is that operators are subject to
strict regulation.
Because they own a physical network, wired
infrastructure providers have to obtain permission
from the government in the form of rights of way
and other obligations. Similarly wireless providers
have to purchase spectrum.
In addition network providers are subject to tax by
local, regional and national authorities. They are
also subject to requirements such as data
protection rules. Plus, they can only serve
customers within the geographic region where
they are chartered.
OTTs, on the other hand, are not necessarily
confined to any geographic region. They can set
up somewhere like Silicon Valley and serve users
anywhere in the world. They dont necessarily
need to fulfil any legal requirements to operate,
The state of OTT and content services in the USA vs. Europe
and they can theoretically serve users in any
country.
In the following section we look at some of the
current debate surrounding the legal issues raised
by OTT services and also the regulatory options for
managing them.
The first OTT service to have a major impact on the
business models of fixed and mobile operators was
Voice over the Internet Protocol (VoIP). Since then,
text messages (SMS) have also been delivered over
the top, impacting on the revenues of fixed and
mobile operators again.
Regulators generally support innovation but they
also need to be fair to all parties, including
customers.
When the European Commission first looked at
VoIP regulation in 2004 it encouraged a light
regulatory touch. This was in recognition of the
difficulties in translating existing regulatory
frameworks into the IP world.
The United States initially took a similar approach,
but VoIP has become more regulated over time in
REGULATION AND LEGAL LANDSCAPE US
Taxes
OTTs are seen as a very positive addition to the
American economy however some foreign
governments have no practical way to collect taxes
from them
Some OTTs set themselves up in low tax countries
to serve users in high tax countries e.g. Netflix and
Skype in Luxembourg, Facebook in Ireland. This
significantly reduces the amount of tax they need
to pay and in addition they are not required to pay
tax in the US on the profits that they make abroad.
It has been observed that the lack of tax and
regulation has helped OTTs proliferate.
P a g e | 11
the United States; especially in the context of
security concerns (whether and how VoIP traffic
can be monitored) and access to emergency call
services. With a light touch, regulation is confined
to specific matters such as access to telephone
numbers, number portability, access to emergency
services, universal service, and national security.
As OTTs grow in both users and revenue, with
more and more communication happening on
unregulated platforms, there is call for a review of
regulations.
User complaints
OTTs tend to be small organizations and if users
wish to complain about their service, there is not
necessarily a clear way to do so. There is generally
no contract between an OTT provider and their
customers and the tariffs are usually small so
customers may put up with an outstanding issue
more readily than if they were investing a higher
monthly sum, as they do with their cable,
broadband or mobile contract. Some question
whether OTTs are even within the jurisdiction of
consumer authorities.
Net neutrality ruling
The state of OTT and content services in the USA vs. Europe
The Federal Communications Commission (FCC)
has always imposed net neutrality rules on
Internet service providers but in January this year
(2014) a US court ruled that the agency doesn't
have the power to require Internet service
providers to treat all traffic equally.
. Previous rules forbid operators from being able
to charge for different levels of service e.g. higher
REGULATION AND LEGAL LANDSCAPE EUROPE
Net neutrality in Europe
rd
On April 3 , the European Parliament voted on a
legislative proposal that includes new rules on net
neutrality. In opposition to the US, the European
Parliament voted to restrict Internet service
providers' ability to charge data-heavy services for
faster network access.
Data roaming in Europe
The European parliament recently voted through
proposals to abolish roaming charges for using a
mobile phone while abroad. It has been an
extremely common complaint of customers that
they are restricted in their Internet usage while
abroad due to prohibitively high costs of data.
Such is our reliance on internet-based services it is
becoming harder and harder for people and
businesses to switch off when they travel.
MONETIZING OTT
OPERATOR STRATEGIES FOR MONETIZING OTT
OTT services are a major disruptor to the
telecommunications industry. As with the
P a g e | 12
speeds or better quality, to content companies
willing to pay the extra. In January a US court that
the FCC does not have the power to restrict
Internet providers from offering these kinds of
services.
This opens up the playing field for a whole new
type of partnership between operators and OTT
service providers.
Typically this has meant higher bills and a lot of
complaints.
Under the new legislation operators will not be
able to charge travellers to the European Union's
28 member states extra for calls, texts and
internet use, a practice
that telecoms commissioner Neelie Kroes has
described as a "cash cow" for the industry.
Operators have responded by warning that bills
could rise domestically to pay for the charge.
French government called for the regulation of
OTTs
Given their growing prevalence, some
governments, most notably the French, called for
the regulation of OTTs. Frances relatively strict
Chronology of Media, or content windowing
legislation impacts subscription VOD services and
has been attributed to slower growth of many OTT
movie services in the country.
introduction of MP3s and the impact that had on
th
the music industry at the end of the 20 century,
The state of OTT and content services in the USA vs. Europe
we are seeing the established players i.e. the
network operators, being hit hard where it hurts -
in their pockets. According to consultancy firm
Ovum network operators will lose $386 billion
between 2012 and 2018 from customers using
over-the-top (OTT) VoIP solutions. In addition to
VoIP there are also messaging, video and other
OTT services eating away at operator revenues.
So what are operators in the USA and Europe
doing to counter this? History has shown that
when these large market shifts take place those
organizations who react with a positive outlook to
the future and adapt to the new world as quickly
as possible will be the ones to capitalize on the rich
opportunity that change can bring.
We have seen some negative reactions to past
strategies that operators trialed to monetize OTT
from both users and regulatory bodies e.g. when
Apples iPhone was released, AT&T imposed a
HOW THE TOP 5 US WIRELESS SERVICE PROVIDERS ARE MONETIZING OTT
AT&T MOBILITY 110.4 MILLION SUBSCRIBERS
According to their website mobile data traffic on
AT&Ts network increased more than 30,000%
over the last six years and is expected to continue
growing.
In January 2014 AT&T Mobility introduced
sponsored data for mobile data subscribers and
businesses. Users can access certain
webpages/apps for free, without using up their
data allowances, because the website/app owner
pays the data charge to the operator on the users
behalf. Providing data via AT&Ts Sponsored Data
service gives companies an effective way to reach
consumers and increase engagement in the
growing mobile market place.
P a g e | 13
restriction to VoIP services over its 3G network.
The restriction was reversed due to the backlash
from users and the FCC.
More recently some operators are taking less
defensive action. It is a challenging environment
but embracing, rather than fighting, the change is
showing positive results for some operators.
The four overarching areas where
telecommunications operators are facing attack
from OTT services are:
1. Voice
2. Messaging
3. Media
4. Cloud services
Operators in the USA and Europe are putting in
place strategies to combat the effect on revenue
from each core areas, with mixed results.
In April 2014 AT&T announced a joint venture with
media company The Chernin Group to focus on
OTT video with the goal of investing in advertising
and subscription VOD channels as well as
streaming services.
AT&T hopes to capitalise on the fact that they
have mobile as well as landline broadband
networks. In their press release The Chernin
Group Chairman and CEO, Peter Chernin said
Consumers are increasingly viewing video content
on their phones, tablets, computers, game
consoles and connected TVs on mobile and
broadband networks, AT&Ts massive reach on
those platforms across mobile and broadband and
their commitment to the online video space make
them the perfect fit for this venture with us.
The state of OTT and content services in the USA vs. Europe
John Stankey, Chief Strategy Officer at AT&T said,
Combining our expertise in network
infrastructure, mobile, broadband and video with
The Chernin Groups management and expertise in
VERIZON WIRELESS 102.8 MILLION SUBSCRIBERS
In January 2014 Verizon announced that it plans to
launch next-generation video services on its FiOS
TV platform and through a new over-top-video
service. The company will use the OnCue
interactive TV technology it bought through the
acquisition of Intel's Intel Media division.
In their press release Verizon said it plans to
integrate "IP-based TV services with FiOS video"
and with interactive video services that are
SPRINT CORPORATION 53.9 MILLION SUBSCRIBERS
Messaging Plus is Sprints Android and iOS app
that provides OTT communications services
including texting, instant messaging, group
messaging, video chat, and photo and file sharing
to any mobile user in North America.
Messaging Plus was built by Jibe Mobile. Yankee
Group analyst Rich Karpinski suggests that "For
Sprint to make its solution something more than
just another messaging app, in the long term it
must figure out how to either interoperate with
OTT apps (and, most appealingly, monetize that
relationship) or band together and (much like SMS)
interoperate on a telco-to-telco level to build an
industry-wide service. RCS could be a path to that
interoperable future, but for now apps like Sprint's
P a g e | 14
content, distribution, and monetization models in
online video creates the opportunity for us to
develop a compelling offering in the OTT space.
integrated with the 4G LTE network operated by
its Verizon Wireless division.
Additionally, Verizon has signed up four new
service provider IP VoIP arrangements as part of its
IP VoIP interconnection partnership program.
Verizon were widely expected to move into VoLTE
some time during the first half of 2014. However
this hasnt happened yet and according to CEO
Lowell McAdam they expect the service to begin
roll out later this year.
exist on an island. That will make it challenging for
it to build the critical mass necessary to make a
significant dent in the messaging arena
For operators, Voice-over-LTE offers a competitive
option against OTT voice and messaging services.
Sprint is moving quickly to roll out its VoLTE
offering. It has announced recently that it is
working with network vendor BroadSoft to roll out
a next-generation IP Multimedia Subsystem to
support its VoLTE plans.
In a statement Iyad Tarazi, vice president of
network development at Sprint, said, We were
seeking a single voice and video application server
platform to support our IMS network
transformation in order to provide the
communication services both our consumer and
enterprise customers are demanding today.
The state of OTT and content services in the USA vs. Europe P a g e | 15

T-MOBILE US 46.7 MILLION SUBSCRIBERS

T-Mobile US is now providing unlimited In their "Abolish Overages" petition at Change.org,

international text messaging and international
voice rates capped at 20 cents per minute. These
were previously strong advantages offered only by
OTT service providers. T-Mobile aim to retain
customers who would otherwise have moved to
OTT VoIP services.
In April 2014 the company announced that in May
it will drop its domestic overage fees.
Chief Executive Officer John Legere said, "Charging
overage fees is a greedy, predatory practice that
needs to go. It's going to be a ball to not only make
this statement to our customers, but to watch
millions of Americans just flip the bird on the
insanity." He says the gross margins operators
charge on overages are almost 100%.

U.S. CELLULAR 4.8 MILLION SUBSCRIBERS

U.S Cellular launched no contract plans called
Simple Connect plans. They are ideal for customers
who want unlimited usage on their devices and the
freedom and simplicity of a no contract plan. A
variety of 4G LTE and 3G Android and Apple
devices are available with these plans.
In April 2014 U.S Cellular announced that in
partnership with King Street Wireless it would
expand its LTE coverage. Improved networks
increase customer experience and satisfaction.
Voice-over-LTE, native IP calling and integration
with rich communication services (RCS) proposes
to substantially improve upon what OTT providers
currently offer.

HOW THE TOP 5 EUROPEAN WIRELESS SERVICE PROVIDERS ARE MONETIZING OTT

VODAFONE 353.0 MILLION SUBSCRIBERS

In spring 2014 Vodafone is launching a public
sector cloud service in the UK and is due to be
responsible for up to 20% of government data
including huge amounts of information on UK
citizens.
In Spain Vodafone is finalizing a TV service with
Canal Plus and intends to launch its OTT service,
branded Yomvi, on all distribution platforms in
the near future.

Vodafones Infrastructure-as-a-Service (IaaS)

cloud, Flexible Computing for Government, will be
a repository for masses of data on British citizens,
potentially including tax and health records.
Vodafone will price usage on a pay as you go
model based on use per virtual machine, per hour,
while storage use is measured similarly, providing
a flexible no-commitment contract.
The state of OTT and content services in the USA vs. Europe
TELEFNICA 220.2 MILLION SUBSCRIBERS
Telefonica has unveiled plans that target more
than $6 billion in revenues by 2015 by entering
new areas ranging from mobile commerce and
advertising to M2M, e-health, video and content,
digital security, and cloud computing.
Telefnica is also the first telecoms provider to
launch a mobile advertising exchange,
FRANCE TELECOM 133.2 MILLION SUBSCRIBERS
In 2008 France Telecom set up an R&D division
called Orange Valle to combine the power of a
major group and the flexibility of a start-up and to
directly compete not with telecom players but
with Internet companies.
Arguably there most notable success has been
LibOn, Orange's free over-the-top communications
app. The app was launched in November 2012 and
DEUTSCHE TELECOM 110.2 MILLION SUBSCRIBERS
Deutsche Telecom has said that it will create a
pan-European all-IP network by the end of 2018 as
well as making a major partnership push on top of
existing tie-ins with the likes of Spotify and
Evernote.
They want to make it so that partners can
integrate their services into the telcos systems
within 3 months, both technically and in
contractual terms. This means boosting
TELENOR 108.8 MILLION SUBSCRIBERS
Customer experience is a key factor in customer
retention. Witold Sitek, senior vice president of
technology at Telenor Group said in a statement
"Telenor is committed to giving our customers the
P a g e | 16
competing with the likes of Google and Facebook.
They have partnered with Blackstone, a private
equity to buy the technology behind MobClix, an
ad exchange that went bankrupt last year.
When it comes to M2M Telefnica has already
agreed partnerships with the likes of Tesla and
JCDecaux.
includes free HD calls and messages and voicemail
service across 95 countries, most of which are not
traditional Orange markets. A $3 monthly
premium version allows for one hour of
international calling to 37 countries, unlimited
customized voicemail greetings, voicemail
transcription and unlimited storage.
Deutsche Telecoms portfolio whilst also giving the
telco control over the billing process.
Partners that the company has indicated particular
interest in are those in the smart home and M2M
space. They currently have partnerships in place
with the likes of home automation platform
Qivicon and with the Tolino e-reader ecosystem.
best possible experience when they use our
networks. As their passion for video from sites like
YouTube grows, we want to make sure we keep
our
The state of OTT and content services in the USA vs. Europe
network capacity and intelligence one step ahead
of demand.
Norway-based Telenor will deploy technology that
automatically manages the delivery of Internet
TV FOCUS
OTT Subscription Video on Demand (SVOD)
services have been instrumental in developing the
growing consumer demand for personalized
viewing of a large selection and variety of content.
Consumers want to be able to watch what they
want, when they want and that means they want
to watch video content on multiple devices. OTT
SVOD services match these requirements very
well.
According to research by MRG the OTT SVOD
market is expected to record significant growth
worldwide in the coming years, reaching nearly
US$8 billion on more than 120 million subscribers
globally by 2017.
According to MRG As the market is evolving, OTT
SVOD service providers are striving to offer
exclusivity and original programming to their
subscribers. The focus is on providing video
content anytime, anywhere and on any device.
OTT SVOD in North America taken from MRG
research
North America is the most developed market for
OTT SVOD services with more than 25 OTT SVOD
service providers.
OTT SVOD in Europe - taken from MRG research
Western Europe is the second most developed
market after North America. According to MRG, in
2012 it accounted for 11% of the worldwide OTT
SVOD market with 7 million subscriptions and
annual revenue of US$575 million.
P a g e | 17
traffic over a mobile network, adapting video
streams to the most suitable format according to a
customer's mobile device, location and
subscription level.
Eastern Europe comprised 7% of the worldwide
OTT SVOD market with more than 4 million
subscribers and revenue of US$253 million.
Eastern Europe consists of more domestic players
as compared to international ones, owing to high
demand for home grown content.
WHAT ARE THE PAY-TV PLAYERS DOING
TO FIGHT BACK?
Prevent subscribers from defecting
In 2012 Comcast launched Streampix (a broadband
movie and TV subscription service) and ties it to an
Xfinity TV and broadband subscription.
Make OTT SVOD services available
through their service
The idea with this strategy is that by simplifying a
subscribers viewing experience it will encourage
them to remain your customer. Virgin Media in the
UK, Com Hem in Sweden and Waoo! in Denmark
have all added Netflix to the pay-TV set-top box.
Sell your content to OTT service
providers
In April 2014 Amazon struck a deal with HBO to
stream The Sopranos and The Wire on Amazon
Prime. According to The Guardian, this marks first
time older shows, including Six Feet Under, have
been available to non-HBO subscribers
Launch a competitive service European
In the UK, Sky launched Now TV in 2011 as a movie
subscription service, priced at 14.99 a month.
They had to lower their subscription price to 8.99
The state of OTT and content services in the USA vs. Europe P a g e | 18

a month to compete with Netflixs 5.99 per

month fee.
According to NScreenMedia 6 months after both
According to NScreen Media, based on analysis of services were introduced, Netflix had 17% market
Skys numbers in May last year, its likely the penetration while YouBio languished at just 3%.
number of Now TV subscribers is a tenth of Netflix.
Launch a competitive service USA
In Denmark local cable operator YouSee launched
a competitive service to Netflix called YouBio. They Verizon partnered with Redbox to launch
hoped that the local content would differentiate it RedboxInstant in March 2013.
from Netflix. As with Sky in the UK, the monthly
Their pricing strategy matches Netflix at $9 a
subscription fee was more expensive than Netflix
month but the content selection is far below what
and also required customers to buy an expensive
customers have become used to with a Netflix
set-top box.
subscription.

TECHNOLOGY
TECHNOLOGY TRENDS AFFECTING OTT

Advances in technology have caused tremendous
disruption in the communications industry. We are
moving towards a world where everything is data.
Technological innovation is key if operators are to
stay competitive, as OTT providers will surely not
slow down in their innovations.
this type of continuous technological innovation
that will ensure that operators stay competitive.
So which technological trends will form the
backbone to innovations in the global
communications industry over the coming
months?

Some operators have attempted to launch their

own OTT-like services, with mixed results, but it is
The state of OTT and content services in the USA vs. Europe
IMPROVED NETWORKS
4G LTE mobile networks will bring faster internet
to peoples mobile phones which will improve,
streaming music and video, video conferencing,
faster downloads and more pictures.
The world's first publicly available LTE service was
launched by TeliaSonera in Stockholm and Oslo in
2009. Verizon Wireless launched the first large-
scale LTE network in North America in 2010.
M2M & IOT
M2M and the Internet of Things present new
opportunities and revenue streams for operators.
According to Gartner the Internet of things will grow
to 26 billion units installed in 2020.
Gartner also said that IoT product and service
WEBRTC AND OTHER OPEN SOURCE TECHNOLOGIES
In their article on industry trends, challenges and
opportunities in 2014 RCR Wireless state:
Disruptive open-source technologies, such as
WebRTC, will further level the playing field as
another equalizing force that will enable new
players to deliver communication services.
CONTINUED GROWTH IN USE OF CLOUD BASED SERVICES
This year, Dutch telecom KPN amassed 800,000
subscribers for its cloud DVR service. This is now
one of the largest cloud DVR services in Europe,
P a g e | 19
As more networks in the US and Europe roll out 4G
LTE they will be able to offer not only faster and
more reliable services to their customers, but will
also be able to compete on quality when it comes
to voice calling.
suppliers will generate incremental revenue
exceeding $300 billion, mostly in services, in 2020.
IoT product and service suppliers
will generate incremental revenue
exceeding $300 billion, mostly in
services, in 2020.
From the webrtc.org website: WebRTC is a free,
open project that enables web browsers with Real-
Time Communications (RTC) capabilities via simple
JavaScript APIs. The WebRTC components have
been optimized to best serve this purpose. Our
mission: To enable rich, high quality, RTC
applications to be developed in the browser via
simple JavaScript APIs and HTML5.
offering 200 hours of storage per user, all of it
stored in the network.
Jon Haley, VP of business development
at Edgeware said in interview with Streaming
The state of OTT and content services in the USA vs. Europe P a g e | 20

Media Global We are seeing many large telco
and cable service providers adding DVR and other
time shift services such as start-over TV to their
current live multiscreen offerings, and we expect
these enhancements to go live during 2014,
In the same article Russell Zack, Kalturas VP and
general manager for EMEA, also thinks were likely
to see more and more operators use nPVRs as part
of their customer acquisition and retention
strategies.

From our feature interview with Roberto Moctezuma, Co-Founder and Board
Member of Voxofon

Where do you see OTT heading in the next 12 months?

I think that we will see a lot more of the evolution towards a world where everything is data. We will start
seeing data only plans that no longer look at voice and messaging as separate applications. I think that were
starting to see that from some operators and I think thats going to proliferate where you basically get just a
data plan and then voice and messaging are just two types of content that you can run on top of that but you
could also run video, news, music, other types of things.

I believe that were also going to see a tremendous explosion in the number of applications that have to do
with point use cases in the communications world and I believe were also going to see some of these device to
machine interconnections start to happen in a big way. Were already seeing consumer solutions in the US
becoming very popular where different things, wearables etc, are connecting to your phone and start uploading
data for different types of reasons measuring fitness, measuring your health, and I believe that these kinds of
solutions are going to start appearing in the next 12 months also.

WHERE DO CUSTOMERS FIT

IN?
New technologies, coupled with consumer
behavior have brought about the dramatic
changes were seeing in the communications
marketplace today.
According to Nielsens quarterly cross platform
report 89% of the time that smart phone users
spend on media is through mobile apps and 11% of
their time spent on media is through the mobile
web. For tablet users the figures are 81% and 19%
respectively.
Customers are not only connecting on an ever-
wider range of devices, experiencing media and
communicating in greater volume - and in new
ways - they are also demanding a consistent
quality of experience across these devices,
platforms and services. For US operators in
particular this presents a significant challenge
because they have traditionally used customer
experience as a key differentiator in the market.
Customers are savvy when it comes to their data
usage too. They know for example, that streaming
The state of OTT and content services in the USA vs. Europe P a g e | 21

video eats up a lot of data and so connect to Wi-Fi
whenever its available. Customers are switching
between their mobile and broadband Internet
connections on a regular basis, which is far from
ideal from their perspective.
Consumers are also becoming comfortably
accustomed to chatting, telephoning, sharing
media and video calling at little or no cost. They
are also willing to switch to other apps, if they
perceive that they offer more value.
These changes in customer behavior and demand
mean that operators are still not entirely sure
which strategy will provide them with the best
ROI, and give the seamless experience that will
enhance customer retention.

From our feature interview with Roberto Moctezuma, Co-Founder and

Board Member of Voxofon

Whilst developing an OTT strategy, how much importance do you place on ROI in comparison to
customer experience?

I think that customer experience is critical because basically at its core it is whether your customer likes
your product, and if your customer likes your product there are always ways of monetizing that and
transforming that into a positive ROI.

DIFFERENCES BETWEEN US AND EUROPEAN CUSTOMERS

Using Googles Our Mobile Planet , Intersog took a
snapshot of todays mobile consumer trends by
comparing the United States to some of Europes
most competitive economies such as Sweden,
Germany and the United Kingdom. Here is what
they found:
Smartphones have the deepest
penetration into the UK and Swedish
markets
Both in the UK and Sweden, 51% of
people own smartphones versus 44% of
the US and 29% of German consumers.
Vast majority of people use their mobile
devices for accessing apps and web
browsing
In the United States, almost 75% of
mobile consumers admit using their
devices for accessing apps and almost
70% browse the Internet on them. In the
UK, Sweden and Germany more than 75%
(cumulative) use their smartphones for
web browsing.
German mobile users purchase more apps
than their counterparts in the UK, Sweden
and USA
In Germany, mobile users have on
average 25 apps installed on their
The state of OTT and content services in the USA vs. Europe P a g e | 22

devices, of which 15 are purchased in an In the United States, 48% of users notice
app store. In contrast, Americans keep on mobile ads while using apps versus 44% in
average 29 apps on their devices, of Sweden, 35% in the UK and 30% in
which only 9 are the purchased ones. Germany.
US consumers notice mobile ads while in
an app, Europeans while browsing a
website

From our feature interview with Roberto Moctezuma, Co-Founder and

Board Member of Voxofon

How can operators work with content providers to optimize OTT services on specific tariffs and enhance
the customer experience?

I think that were seeing what I call a Cambrian explosion of applications I think that with the internet of
things, all the apps that are in the app stores, with mobile to mobile there are tremendous opportunities for
operators to offer new value added services, new types of data plans. Typically what were seeing is still very
much rooted in the voice and messaging world.

As operators come to think of themselves more as data providers, amongst other things, there are multiple
roles they can fill, but in their role as data providers they can customize depending on the speed of traffic,
depending on whos connecting, and make a difference, everything from high streaming high quality video
for remote medicine solutions, down to very brief short bursts transmissions from devices for example that
are connected sensors that just reflect the status of an oil pipe or a tank for example. Still we are going to see
a tremendous demand for these services and operators need to come up with all of these plans still so that
these solutions can be enabled. So I believe that as solutions get created by operators it will give OTT players
tremendous opportunities to partner with them and create very custom solutions from everything from the
consumer side of the business through to the enterprise side also.

CONCLUSION

This is not the first time that new players and
technologies have disrupted an industry and it
wont be the last.
The first time the over-the-top phenomenon
occurred was when IBM shipped all of its PCs with
Microsofts Windows operating system. Whats
been learnt over the course of time is that in these
circumstances organizations need to move with
the times, evolving to meet their customers needs
and adapting to the new marketplace in order to
remain competitive.
Despite the rapid adoption of OTT services we are
only at the beginning of a new era for
communication and the companies that make up
The state of OTT and content services in the USA vs. Europe P a g e | 23

the industry. There is still a lot of untapped
potential - for example in enterprise solutions.
Over the coming months it will be interesting to
see how changes in the regulation of OTTs will
affect the industry further, as differences between
the USA and Europe in their approach to net
neutrality play out. This current difference is
potentially the biggest difference between these
two regions.
In terms of innovation were seeing the big players
like AT&T and Verizon Wireless following in the
footsteps of France Telecom's innovation
unit Orange Valle, opening innovation centers in
Silicon Valley, indeed even some of the smaller
providers in the USA are doing the same.
According to Roberto Moctezuma, we are seeing
more risk-taking in the USA, unlimited data plans
are allowing customers the flexibility to use their
devices in the way that they wish. In turn this
should allow operators and OTT services to see
how people want to be using technology and from
there can offer them more of what they want
which is good for the bottom line. Perhaps this will
be the key for innovative organizations to thrive.
As a user the message is make the most of OTT
services. The market dynamics suggest that things
are only going to get better ahead for consumers
as competition increases.

INTERESTED IN LEARNING
MORE?
LEARN MORE AT MONETIZING OTT AND CONTENT SERVICES

Telecoms IQs Monetizing OTT and Content Services provides a unique opportunity to learn from the entire
OTT ecosystem how operators can generate revenue from OTT and content services.

15+ hours of interactive sessions and networking will enable you to determine the role of the operators in
achieving TV Everywhere, and discuss with your peers how you can ensure long-term profitability in an
increasingly IP-driven market.

Join Monetizing OTT and Content Services in Las Vegas 15 17 July 2014 to discover through proven case
studies which operators are already leveraging the surge in OTT usage to widen their product portfolios, and
find out how to use these to enhance the stickiness of your customers.

Top Reasons to Attend Monetizing OTT and Content Services:

The state of OTT and content services in the USA vs. Europe P a g e | 24

1. Take advantage of the only event in North America to bring together the entire OTT ecosystem
including messaging, video and TV

2. Learn from pioneering operator, OTT provider and content provider case studies from across the
Americas how to deliver an optimal experience for OTT and content services to enhance customer
stickiness

3. First-class networking opportunities will enable you to take home a stack of business cards and
contacts, with over 2/3 operator attendance at Monetizing OTT Services 2013

4. Enjoy 15+ hours of networking and interactive sessions discuss how operators can generate new
revenues from OTT and content services

5. Benefit from the co-location and shared exhibition hall with Telecoms IQs Big Data Monetization
event and M2M Forum, to meet and benchmark strategies with a wide range of job functions

Want to find out more? Visit www.ottandcontentservices.com to download the brochure.

ABOUT TELECOMS IQ

What is Telecoms IQ?

Telecoms IQ deliver carefully focused, operator-led

conferences that provide cutting-edge case studies, open
discussion, practical knowledge transfer and invaluable
networking opportunities.

Our comprehensive range of events is designed to give telecommunications providers and suppliers the
technical and strategic know-how to gain a competitive advantage in today's market. The speakers are
carefully selected to evaluate trends and to provide case study analysis and solutions. Delegates to our
telecoms events are therefore able to identify the strategies, technologies, standards and applications
required to drive profitability.

Key areas of focus include:

Customer Management Customer Experience Management, Customer Loyalty & Profitability,

Customer Segmentation and Customer Insight.

Network Evolution and Optimization Mobile Network Performance Management, Offloading, LTE,
Mobile Backhaul and FTTx.

Service Development and Revenue Generation M2M, Mobile Payments, VAS and Big Data
Monetization

Contact Us

Website: www.telecom-iq.com

General Inquiries: enquire@iqpc.co.uk

Telephone: +1 800 882 8684 or +44 207 368 9737