The whirlwind of OTT
“Can I whistle during a call?” - That was the strange question that the head of AT&T (Walter Gifford, President AT&T) was asked back in 1956. And his answer initiated a staggering change in the telecommunication world that is still going on today: “Yes, of course you can!”.
The reason for the strange question was that, at that time, Telecom Operators defended their exclusive right on anything that had to do with telecommunications (including forbidding a customer to put a cover on a telephone directory in North Carolina). Their religious preservation of the network and whatever connected to it remained till the eighties when the pressure deriving from Japanese consumer electronics flooding the world with answering machines and cordless phone broke in a de-facto way the Telecom Operators monopoly on the edges of the network.
Faxes, however, represented the first “legal” entrance of Over the Top services (answering machines were not "legal" although no action was taken by Operators to stop their use since they resulted in an increased traffic, and revenues, for them). The network was a dumb pipe, the value rested on the fax machine.
From an OTT point of view the network was, is but may no longer be, a black box. They have to rely on the functionalities that can be executed at the edges of the network. Some of these edges are not under their control, like smartphones, but can be leveraged if the owner accept to install an application that they can control. One of the edges can be under their control, like servers connected to the network by Skype or services provided by the Amazon Cloud.
The network architecture does not change but the service architecture is new and can be orchestrated by the OTT.
A device provider can open the inner core of its device to several levels and depending on this the application created by the OTT can leverage more of less of the device characteristics.
The explosion of Apps that started with the opening up of the iPhone and the availability of a marketplace (the Apps Store) has profoundly changed the scenario of telecommunications cutting out the Telecom Providers from the delivery of (most) value added services.
SMS, possibly the last mass market success “invented” and “provided” by Telecom Operators is now in rapid decline overtaken by text messages that are provided (for free…) by OTT. And these new services have rapidly evolved to include voice, image and video messages. Think of the time it took Telecom Operators to deliver MMS, to the cost for the user and to the complexity of embedding and supporting MMS into the Telecom Operators network architecture (again an overlay on the existing network).
OTT have been able to deliver a better service at lower cost and more rapidly. And to do that they exploited the processing/storage and communications capabilities provided by the smart phones, an investment born by customers with no impact on their balance sheet.
Voice, converted into bits and managed “at the edges” has also become an OTT turf. It did not kill completely the voice service provided by Telecom Operators because they ended up (were forced) to provide the voice “for free” bundled inside the access fee on fixed lines (and it is rapidly happening on wireless lines as well).
The crucial role of architectures in the balance of technology, performance and economics is evident.