Carrier Evolution

The Verizon and Coinstar joint venture to create a streaming version of Redbox is part of a pattern at Verizon and elsewhere, namely that over the top services increasingly are being viewed as a way to sell services to “non-customers.”

In essence, the new streaming service will reach beyond the footprint of Verizon fixed network customers and appeal to all 30 million Redbox customers who have been renting DVDs from the Redbox kiosks.

According to Verizon Communications CFO Fran Shammo, Verizon was looking to create a streaming service that would extend “outside of just the FiOS footprint, utilizing the content that FiOS has and bringing that into the rest of the United States.”

Some think something similar will happen as Verizon’s agency agreements with Comcast, Cox Communications, Time Warner Cable and Bright House Networks develop, as well. Those efforts so far have had each of the partners co-selling cable TV, fixed network broadband access and fixed network voice, plus wireless service, outside the Verizon fixed network footprint.

In essence, Verizon is using the agency agreements to sell services to “non customers” outside the Verizon fixed network footprint.

T-Mobile USA has found much the same results with its “Bobsled” over the top VoIP service.

Since April 2011, more than 10 million calls have been made on the over the top Bobsled application made available by T-Mobile.

Of the millions of Bobsled calls made to phone numbers, 80 percent originate from outside the United States, though messaging seems to be a U.S. phenomenon. Although Bobsled Calling has seen significant international usage, Bobsled Messaging users are predominately U.S. based, with 90 percent of messages sent domestically.

Usage statistics also show one of the key present realities of over the top apps sponsored by communications service providers, namely that usage might often be by “non-customers.”

Of the more than one million Bobsled Calling users, 95 percent are not T-Mobile wireless subscribers, T-Mobile says.

That should suggest one key strategic difference between a carrier-offered app or service, and an over the top app, namely that in some cases the OTT apps do not necessarily cannibalize current customer use of carrier services, but essentially are an “out of region” service that gets used by non-customers.

Bobsled Messaging is now available for download free of charge on all Android-powered smartphones and tablets through the Google Play Store on Android and can be accessed through any browser-enabled device.

The Bobsled Calling application also is available for download from the iTunes App Store.

That might suggest one as-yet misunderstood way service providers can approach OTT apps, especially those which are functional substitutes for current “paid” services. In many instances, OTT is a way of extending service to non-customers or non-subscribers.

That means OTT can be an out of region growth strategy similar in principle to the ways service providers have grown by launching service outside their legacy service territories.

In Bobsled’s case perhaps five percent of users might be using the app to reduce spending on T-Mobile USA services. The other 95 percent are not T-Mobile USA customers. That suggests there is a large incremental revenue opportunity among non-customers.