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OTT - Threat or opportunity for African Telcos?

Author

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  • Stork, Christoph
  • Esselaar, Steve
  • Chair, Chenai

Abstract

This paper analyses the transition from the voice and SMS era of mobile telephony to the data-only era, and the strategies that operators have adopted during this transition phase. Key drivers for the transition are Over the Top services (OTTs). The paper uses quarterly prices for prepaid user baskets across 44 African countries and introduces an alternative tool to measure and compare top-up bundles. Prepaid voice, prepaid data and top-ups are analysed, to demonstrate the various strategies operators in Africa have adopted, in response to revenue loss caused by OTTs, such as Facebook, WhatsApp and Skype. Case studies of dominant operators in South Africa, Kenya and Namibia are used to highlight which strategies have successfully defended or increased mobile operator revenues. The paper shows that embracing OTTs, and providing prepaid products that resemble flat-rate pricing (top-ups with limited validity), is the most successful strategy for mobile operators to retain revenues. The paper also shows how zero-rated OTTs can be used to gain market share for new entrants. We argue that regulators should resist the push for regulating OTTs, and instead facilitate the evolution to flat access pricing.

Suggested Citation

  • Stork, Christoph & Esselaar, Steve & Chair, Chenai, 2017. "OTT - Threat or opportunity for African Telcos?," Telecommunications Policy, Elsevier, vol. 41(7), pages 600-616.
    • Handle: RePEc:eee:telpol:v:41:y:2017:i:7:p:600-616
    DOI: 10.1016/j.telpol.2017.05.007
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    References listed on IDEAS

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    1. Oecd, 2012. "Methodology for Constructing Wireless Broadband Price Baskets," OECD Digital Economy Papers 205, OECD Publishing.
    2. Oecd, 2015. "Triple and Quadruple Play Bundles of Communication Services," OECD Science, Technology and Industry Policy Papers 23, OECD Publishing.
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    Citations

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    Cited by:

    1. Chen, Chun-Mei, 2019. "Evaluating the efficiency change and productivity progress of the top global telecom operators since OTT's prevalence," Telecommunications Policy, Elsevier, vol. 43(7), pages 1-1.
    2. Esselaar, Stephen & Stork, Christoph, 2018. "Mobile Usage baskets to measure ICT Sector Performance," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190397, International Telecommunications Society (ITS).
    3. Jirakasem, Monarat & Mitomo, Hitoshi, 2019. "Relationship of Over-the-top (OTT) Communications and Traditional Telecommunications Services: the Case of Thailand," 30th European Regional ITS Conference, Helsinki 2019 205184, International Telecommunications Society (ITS).
    4. Wellmann, Nicolas, 2019. "Are OTT messaging and mobile telecommunication an interrelated market? An empirical analysis," Telecommunications Policy, Elsevier, vol. 43(9).
    5. Sung, Nakil & Kim, Minchang, 2023. "COVID-19 and changes in content usage behavior: The case of South Korea," Telecommunications Policy, Elsevier, vol. 47(1).
    6. Dzanku, F.M. & Osei, R.D., 2018. "Impact of pre– and post-harvest training reminders on crop losses and food poverty in Mali," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275924, International Association of Agricultural Economists.
    7. Esselaar, Stephen & Stork, Christoph, 2018. "OTT applications driving data revenue growth," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190337, International Telecommunications Society (ITS).

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