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What is an Over-The-Top (OTT) Application or Service? - A Brief Explanation

OttWhat is an "over-the-top" or "OTT" application or service? How does an OTT telecommunications or media app/service differ from a "regular" application?

The answer depends upon your perspective.

For a regular user of the Internet, an "OTT app or service" is something like:

  • YouTube, Hulu, Netflix or Apple TV for streaming video
  • Skype or Facetime for voice/video calls
  • WhatsApp or iMessage for messages on a mobile device
  • Xbox 360 or World of Warcraft for gaming

Basically, any service you are receiving over the Internet that is NOT provided directly by your Internet Service Provider (ISP).

Of course, for an ISP / telecommunication provider, the critical point about an OTT app/service is the part I emphasized - it is NOT a service you are paying them for.

And they are not happy about this.

It's not clear to me when precisely we in the industry started talking about "over-the-top" applications and services, but I first saw OTT mentioned back in 2008 or 2009 when the term was primarily applied to video services such as those coming from Netflix or Hulu. At the time, major US service providers such as Comcast and AT&T were rolling out their video-on-demand services and were being challenged by these "OTT" providers. Netflix and Hulu provided their service "over-the-top" of your Internet connection, without any interaction whatsoever with your Internet service provider (nor any revenue to that service provider).

Since that time, I've seen "OTT" applied to the zillions of messaging apps that have now sprouted up in the mobile environment to provide an alternative to the costly SMS provided by the traditional telcos. WhatsApp, Apple's iMessage, Blackberry Messenger (BBM), TU Me... and a hundred others that keep popping up on a weekly basis. Some would even lump Twitter and Facebook into this category. (And SMS revenue by telcos are facing a serious decline from the use of these apps. Ovum estimated the decline at $13.9 billon for 2011.)

I've also seen "OTT" applied to VoIP apps such as Skype (whose network overlay architecture I wrote about previously). And now we have Apple's Facetime and a hundred startups like Viber, Voxer, Tango, etc.

Recently I saw a document that painted "OTT" even more broadly as a term applying to any "content provider" on the Internet, i.e. basically everyone publishing content in any form.

The key point of all of this is that the OTT apps/services do not come from the traditional telcos or Internet service providers.

The telcos and ISPs are merely providers of the IP connectivity. The OTT apps ride on top of that Internet connection.

The telcos and ISPs are simply big, fat, dumb pipes.

Some of the telcos and ISPs out there are smart enough to see what's going on and are trying to become the biggest, fattest pipe out there and provide the best possible service. Some are launching their own apps/service that are NOT limited to their own customer base.

And some of the telcos are so desperate to hold on to their legacy business models that they are trying to get the International Telecommunication Union (ITU) to regulate OTT apps and service providers through the upcoming World Conference on International Telecommunications (WCIT). They are hoping to use WCIT as a vehicle to re-inject themselves into the revenue stream and somehow start charging "OTT" providers. (But that's a topic for another blog post...)

So when you hear people talking about "OTT apps" or "OTT services," they are typically referring to applications or services that ride on top of your Internet connection - but have no relationship with the provider of your Internet connection.

OTT apps and services are a major component of the ongoing war between "content providers" and "access providers"... a fundamental tension within the Internet that shows no sign of being resolved anytime soon. But more on that another time... :-)

In the meantime, what we all can do is reject the use of the term "OTT" from the telcos and instead focus on referring to these apps instead as:

  • "IP communications apps"
  • "IP-based communications apps"
  • "communications apps"
  • "messaging apps"

because they are just apps that work on IP networks... whether those are from the legacy telcos or any other service provider.