definition for: #ottbypass

OTT is Over-The_Top and covers a variety of companies which piggyback the signals going between licensed telephone companies, originating and terminating their signal to/from, the smartphones of customers. Although many wish to believe that this is not considered bypass fraud, the reality is yes; because, the OTT company is using either or both, the SIM card (or CDMA serial) and/or serial of the device to direct the SMS, MMS, VM or call.

For most of us in telecommunications, the answer is yes. And regulatory authorities are asleep at the wheel today, just as they were 20 years ago with the advent of Voice over Internet Protocol. The scenario today is quite different than it was with VoIP. VoIP started with people communicating purely over the internet, PC to PC. There was virtually no argument over net neutrality. A few countries allowed or tried to block ports to prevent this communication and failed; because, just as quickly as they blocked ports, the provider would assign different ports for the signal to travel. But that was only the beginning. A small tech company in Israel, Vocaltec, in 1994, built the first gateway which converted IP signaling to analog telephony signaling and vice versa, opening up Pandora ’s Box for telecommunications and federal regulatory agencies around the world. Not only were they bypassing licensed carriers, but they were not paying taxes. It took in the USA for example, about 10 years for Congress and the FCC to put forth regulations, licensing and requiring taxes to be paid for VoIP carriers. And 10 years after the first law, they still do not have it right. But since even the original PTT’s began using VoIP, and now MNO/MVNO’s are as well (LTE), it’s something of a moot point really. With the advent of the smartphone, the entire ballgame changed. Now we are faced with “Application Disruption” (apps). In early 2009, they developed Whatsapp and it was beset with problems. But in June 2009, Apple followed Blackberry in developing a “push” process, and Whatsapp modified its platform and within days had 250,000 users. By 2013, Whatsapp had 200,000,000 ACTIVE users. And this year, 2015, they were over 900,000,000 and my guess is, it will be 1,000,000,000 by Christmas. Now in all fairness, there are many more OTT companies besides Whatsapp; but I would rate them as the largest, as Skype is not pure OTT…they actually license or sub-license phone numbers and pay taxes. However, what started as a messaging company, this year began sending voice messages, and almost immediately, voice calls. And let’s not forget the behemoth; Facebook bought them for around $16,000,000,000…billions. How did this happen? Well, it was due, primarily to two important factors. One, the cellular service providers, became disinterested in SMS and MMS. After several years, competition drove it to be a predominantly free service in most developed nations. Not all though…in most countries in Latin America and many in Asia and Africa, SMS/MMS, are still an extra charge on prepaid plans. And that was what the developers of Whatsapp saw when they left Yahoo and vacationed in Latin America…a big opportunity. The cell companies did not see them as a threat in SMS/MMS; because they were looking at the future of their newest business model…bandwidth! All of us in telecom around 2004 knew that bandwidth was going to be the atomic bomb in telecom and the truth be known, the development of the smartphone, was and is, directly related to the technology surge we are in today. However, what the Big 6 cellular service providers (MNO’s or CSP’s as was the first abbreviation) did not take into account was the trend in Application (app) development and the public obsession for them. As they used the surge in OTT companies to fuel the public desire for more bandwidth, they failed to adjust their business model to the change in developments, both in the number of new OTT companies, and the trends. Not only are people using video calls for international calling, messaging (text, audio & video); but, they are using it for local transit. A business associate here in Bogota, Colombia, just called me on Whatsapp to discuss a client in Bolivia. Danny is at home, 5 miles from my hotel! Bottom line, it is too late to stop OTT companies. And if the truth be known, the current model of OTT companies is only the tip of the iceberg as to what they will become over the next five years. In other words, it is going beyond simple voice and video. Yet, the current trend of APP-TELECOM must conform to the regulated world. It is not a matter of net-neutrality at all. It is a matter of literally destroying the economic balance of most countries and the world, for that matter. Legal Carriers cannot support the cost of capital improvements and depreciation purely on bandwidth, and the public will not stand for paying the toll either. Governments will not be able to protect the citizens if their own tax base income is reduced to nothing. In the last month, I have made an unofficial survey of Carriers. The consensus, no the reality is, that OTT companies are taking away a minimum of 10% of the income from Carriers, and this is AFTER the insertion of gains from broadband sales. Just as income from SMS/MMS, fell due to competition; so has bandwidth sales. The legal Carriers are required by law in most countries to provide stable and high quality in their calls; but App Companies have no such requirement and the people except it as low quality because it is free. But what happens if the Carriers stop making traffic in voice calls, and move to pure bandwidth? Can you conduct a business call from Panama to Moscow on Whatsapp? In April 2015, Forbes predicted that between 2012 and 2018, the telecommunications industry will lose a combined total of $386 billion because of OTT services like Whatsapp and Skype. However, that month, Whatsapp reported 800,000,000 active users. Forbes’ prediction is about 18% under per year; so, if you roughly factor that in for only the three remaining years without compounding at all, the number grows from $386B to over HALF A TRILLION DOLLARS! The company, I work for, Purgefraud, developed state of the art processes utilizing artificial intelligence and DPI, to accurately identify the who, what, where and how, of OTT Bypass while some other companies have purported to do the same. And Purgefraud has gone a step beyond simply detecting. Purgefraud has designed a program and advisory service to mitigate the losses now being incurred by legal providers of telecommunications. So, although stopping OTT is not going to happen, no more than will the war on drugs; because, what people want, people get. However, those MNO’s who wake up in time and work with companies who have a solution with backbone, can mitigate their losses. And regulatory agencies which are able to come to terms with the new world we live in, where technology advances so quickly that companies, can arbitrate the issues without waiting for legislative support.