Allot Communications says mobile data bandwidth usage grew 83 percent during the second half of 2011, based on data collected from Allot’s worldwide mobile operator customers. That was part of a compound annual growth rate for mobile bandwidth of 234 percent during 2011.

The Allot MobileTrends Report also shows that video streaming bandwidth consumption grew 88 percent, now representing 42 percent of mobile bandwidth. YouTube alone now accounts for 24 percent of the total broadband traffic and 14 percent of total YouTube traffic is viewed in high-definition.

WhatsApp, an over the top messaging app, now accounts for 18 percent of the IM bandwidth, a dramatic increase in popularity from only three percent in the first half of 2011.

Facebook Messenger grew from zero to 22 percent of total IM traffic in just four months, the study shows.

As you might expect, Allot argues that dramatic growth of all sorts of over the top apps represents both a threat to traditional mobile operator revenue streams, as well as a possible opportunity.

The threat is shown most starkly in the continued growth of over the top voice and messaging, to the extent that over the top IM displaces use of text messaging. The opportunity might lie in the creation of application-based pricing that matches end user perceived value to the price of bandwidth consumed.
To be sure, the IM displace effect seems to be mostly a European phenomenon at the moment. But the general pattern holds for most apps, which increasingly can be created and delivered over any mobile or broadband connection, with near-zero revenue implications for access providers.

There would seem to be two approaches to revenue generation. Allot emphasizes value-based pricing that could raise profit margins and gross revenue. At some point, one has to wonder whether some access providers also will become “over the top” application providers themselves, in particular to attack new markets outside the existing network footprints where those firms already operate.

In other words, the over the top business problem is that revenue is earned by the app provider, not the access provider in a direct sense (though the rationale for buying access obviously is stronger as each additional app is added, and as some apps provide incentives for users to buy more-expensive access packages).

At some point, especially where over the top approaches can be used by access providers to extend sales out of territory, one would expect more access companies to become OTT providers themselves.

The approach is not “compete with Google,” but rather “compete with other service providers out of territory.”

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