Associate Professor & Co-director, Institute for Information Policy, Pennsylvania State University
Dr. Krishna Jayakar is an Associate Professor at Penn State University, and the Co-Director of the Institute for Information Policy. His research focuses on telecommunications policy and economics, with a special focus on universal access to broadband. He is the co-editor of the Journal of Information Policy. Dr. Jayakar's research has been supported by grants from the Pacific Telecommunications Council, Time Warner Cable, the Free Press Foundation, AT&T etc. Before joining academics, he was a Research Officer in India's Ministry of Information and Broadcasting.
Research Workshop: Revisiting the Universal Service Obligation (USO) in the Era of Abundance
Sunday, 17 January 2016
Research Topical Session 5: Service Business Models
Monday, 18 January 2016
This paper investigates the impact of Over-The-Top (OTT) services on international call volumes originating or terminating in the United States.
Over-the-top (OTT) services such as Skype, WeChat, KakaoTalk and WhatsApp have dramatically proliferated in the past two years, and are increasingly drawing voice and SMS traffic away from mobile operators (OECD, 2013). For example, global SMS revenues have already shown dramatic declines especially in the areas where OTT services have proliferated the most (Hibbert, 2013). The latest estimates show that Skype-to-Skype international traffic has grown 16 percent in in 2013-14, to 248 billion minutes.
Traditional carriers have alleged that the proliferation of OTT services has resulted in loss of business for themselves. However, this claim is complicated by the fact that the usage and revenues of traditional carriers too have continued to increase during the last decade, albeit at a lower rate than the historical norm. For example, Telegeography (2014) estimated that annual growth in international call volumes slowed to 7 percent from 2008 to 2013, well below the historical norm of 13 percent. But OTT providers argue that international traffic growth historically was driven by falling prices, deregulation of interconnection charges, improving technology and the proliferation of mobile services in the developing world. But by 2008, these changes were essentially complete, and were no longer driving international call volumes. Thus, according to the OTT providers, the slowdown in traditional carriers’ international call volumes is not attributable to the proliferation of their services.
In this context, this paper seeks to investigate whether changes in international call volumes is driven by the proliferation of OTT services, and if so, the magnitude of the substitution effect. We focus on international call volumes originating or terminating in the United States, since reliable and disaggregated-by-country data is available from the International Bureau of the Federal Communication Commission (FCC), through its annual International Traffic Data Reports. However, reliable statistics on the prevalence of OTT service use in different countries is not available, especially because a number of OTT services including WeChat, KakaoTalk.