OTT means “Over-the-top” and some people refer to it as “value added”. We’ve been using OTT services for years now without ever realising it. An OTT service is basically a serviced used over the network services you receive from your service provider.
Here’s an example of an OTT service to help you understand it. You have a mobile phone that has a 4G data plan, GSM calls, and SMS. You take this smartphone and you install a VOIP service such as Skype, Viber, or WhatsApp to make cheap and free voice calls and send messages over 4G. In this example Skype would be the OTT service. Your service provider gives you the network, but they have no control, rights, or responsibilities on the OTT service you use with the network. The idea behind OTT is that users have the freedom to use the internet how they want. The network provider takes the IP packets from one place to another. They can know what the packets contain and how many there are, but it’s not like they can do anything about it.
This is actually one of the main reasons that VoIP is often cheaper than making an expensive phone call. When you make a call with a VoIP service you aren’t paying for the phone line, which is what you do with a regular phone call. Rather, you would be using the internet that’s already there without paying for it. If you were to look at the way people using VoIP services are billed, you’ll see that calls made to other people on the same service are free. Costs are incurred when relaying the call to a PSTN or cellular network.
The advent of the smartphone has revolutionised the OTT services market, in particular sending voice and video messages over wireless network. Smartphones have the capability to make advanced calls and play multimedia.
Using VoIP to Make Free Calls and Send Free SMS
The VoIP industry has easily become the most successful one of the decade. VoIP offers a range of benefits, including saving tons of money with local and international calls, as well as text messages. There are services that allow you to send text messages and make calls for free using your smartphone.
OTT has also been a big factor in the rise of Internet TV (IPTV), which is when videos and television shows are distributed legally over the internet. There are a range of free OTT services such as YouTube, NetFlix, or Hulu. There are many websites where people can watch content streams and video content.
What can Network Carriers Do?
As great as OTT is for customers, it causes harm to network service providers. Telecoms are losing millions of dollars thanks to VoIP OTT operators, and this is without the damage caused by other OTT services such as video services. It was obvious that network carriers would respond.
There have already been some reactions in the past, including placing network limitations. When the Apple iPhone was released, AT&T imposed a VoIP restriction on the 4G network. The restriction was lifted after complaints from users and pressure from the FCC. Fortunately, these restrictions aren’t as common these days. Telecoms have realised that they can’t win this particular battle, and have shifted their focus to offering great 3G and 4G connectivity to those using OTT services.
There are some network providers that have created their own “OTT services” where they offer customers great rates. There are some people who have gone completely out of the reach of network providers though. These people use their OTT services to make calls, watch videos, and send messages across free Wi-Fi hotspots.
As a user, you need to be making the most of these OTT services. There’s no risk involved either, as all the market dynamics seem to suggest things are only going to get even better for consumers.
How to rate and bill OTT services?
For some of OTT services such as NetFlix and Hulu, a subscription billing is enough. These OTT service providers do billing on a monthly basis; they have a simple subscription business model. However, if they would like to offer any pay per download or pay per see business model, a simple subscription billing would not work for them, anymore. In this case they will need to utilize a usage-based billing. If we examine OTT communications service providers such as Skype, Viber or Whatsapp we can observe more complex business scenarios. At Skype they do rating per event; that means rating per voice call or sending a text message. Even more, they provide a prepaid business model. To enable that they need to have a real-time rating billing which rates all events in real-time. Therefore, they need to have a real billing as a service (BaaS) subscription and usage-based billing such as FlyBilling.