OTT stands for over-the-top and is also referred to as “value added”. Most of us have been using OTT services without actually realizing. Simply put, OTT refers to the service you use over the network services of your service provider.
Here is an example to better understand the concept. You have a 3G data plan with a mobile operator, from which you have bought a smartphone and with which you have GSM calls and SMS service. Then, you use Skype or any other VoIP service to make cheaper and free voice calls and SMS using the 3G network. Skype here is referred to as the OTT service.
The service provider whose network services are being utilized for the OTT service has no control, no rights, no responsibilities and no claim on the latter. This is because the user should be free to make use of the Internet the way they want. The network carrier only carries the IP packets from source to destination. They can be aware of the packets and their contents, but can do nothing much about it.
Besides, this is what makes VoIP a much cheaper and often free alternative to expensive phone calls – the caller does not pay for the dedicated phone line as is the case with traditional telephony, but uses the existing Internet without dedication and without rental. In fact, if you read more on the billing mechanisms of most VoIP services, you will see that calls that are placed within the network (between users of the same service) are free, and the paid ones are those that involve relaying to a PSTN or cellular network.
The coming of smartphones have revolutionized OTT services, namely voice and video services over wireless networks, since these machines have multimedia and advanced communication functions.
Free and Cheap Calls and SMS with VoIP
VoIP is the most successful industry of the decade. Among its numerous benefits, it allows communicators to save a lot of money on both local and international calls, and on text messages. You now have services that allow you to use your smartphone with the underlying network to make free calls and send free text messages.
OTT has also been a vector in the proliferation of Internet TV, also known as IPTV, which is the legal distribution of videos and television content over the Internet. These video OTT services are obtained free online, from Youtube for instance and from other sites where more sustained and constant streaming video content are offered.
What Will The Network Carriers Do?
OTT is causing harm to network service providers. According to Ovum, a consultancy firm, telecoms are expected to lose $479 billion of revenue to VoIP OTT operators. And this excludes video and other OTT services. Now network carriers will want to react.
We have seen reactions in the past, with restrictions imposed on their networks. For example, when Apple’s iPhone was realeased, AT&T imposed a restriction to VoIP services over its 3G network. After pressure from users and the FCC, the restriction was finally lifted. Fortunately, we aren’t seeing many of those restrictions now. The telcos have realized that they can’t fight that battle, and that maybe they should content themselves with reaping the benefits of offering good 3G and 4G connectivity for users who use OTT services. Some network service providers even have their own OTT service (which is finally not really OTT, but rather an alternative to it), with favorable rates to its customers.
Now some users will move completely out of their reach. It’s those who will use the OTT services – make calls, send text messages and stream videos – in a Wi-Fi hotspot, which is free.
So, as a user, make the most of OTT services. You risk nothing, as the market dynamics suggest that things are only going to get better ahead for consumers.