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Mobile operators lose on OTT services; FCC delays incentive auction

In telecom news, a report found that OTT services are cutting into mobile operators' messaging revenue, while the FCC delays its incentive spectrum auction to 2016.

This week in telecom news, a Juniper Research Ltd. report found that mobile operators stand to lose $14 billion in potential sales as users opt for over the top (OTT) messaging services instead of the text messaging services provided by operators. Meanwhile, the Federal Communications Commission (FCC) has delayed its upcoming incentive auction to 2016 due to a lawsuit brought on by the National Association of Broadcasters (NAB).

As customers demand more Internet of Things (IoT) services, service providers are seeing new revenue opportunities, according to a report from online security provider AVG Technologies. More than two-thirds of service providers plan to expand their current IoT offerings.

Mobile operators lose revenue to OTT services

A report from Juniper Research suggests that mobile operators could lose out on $14 billion in potential sales due to the rising popularity of OTT messaging services like Facebook Messenger and WhatsApp.

Mobile operators have traditionally relied on text messaging services as a major revenue stream. But as more users rely on social media for communication, Juniper questioned whether texting services are relevant to consumers and enterprises.

By the end of 2014, 120 million global users are expected to use an OTT VoIP service on their smartphones. But OTT services do not generate sales for mobile operators, despite their heavy data usage.

The report found that 4G wireless will compound mobile operators' lost revenue issues because it makes mobile VoIP a more practical option for users. Juniper said mobile operators must better engage with 4G voice services and find new areas to create revenue, like mobile payments and operator VoIP.

FCC spectrum incentive auction pushed back to 2016

The FCC has hit the pause button on the 600 MHz broadcast spectrum incentive auction, citing "undeniable impediments" pushing the auction back to 2016. The auction involves the FCC buying spectrum licenses from television broadcasters and reselling them to wireless providers.

The delay was partly attributed to a pending lawsuit filed by NAB, as well as the need for more time to recruit television stations to participate in the auction.

The lawsuit filed against the FCC focuses the way the FCC counts how many viewers each station has, which is leading to fears of shrinking the footprint of stations after the auction. Broadcasters are also looking for more compensation for stations that decide not to sell their spectrum but are required to repackage their signals after the auction.

"We look forward to a speedy resolution of our legal challenge and a successful auction that preserves access to free and local TV for every American," said Dennis Wharton, spokesman for the National Association of Broadcasters, in a statement.

Gary Epstein, chair of the FCC's Incentive Auction Task Force said in a blog post said final briefs for the suit are not due until January 2015, which leads to the need to delay the auction.

"We are confident we will prevail in court, but given the reality of that schedule … we now anticipate accepting applications for the auction in the fall of 2015 and starting the auction in early 2016," Epstein said. "Despite this brief delay, we remain focused on the path to successfully implementing the incentive auction."

Providers see new opportunities with IoT

More than two-thirds of managed service providers (MSPs) believe IoT will open the door to new revenue opportunities, according to a market research report from AVG Technologies.

"Our MSP partners are telling us that the Internet of Things is one IT trend making an immediate difference to their bottom line and the business customers that they serve," said Mike Foreman, AVG's general manager, SMB.

More than half of MSPs said their customers are demanding IoT-related services, and 77% of MSPs plan to expand their IoT services and products to meet that demand.

However, 68% of small and mid-size businesses surveyed said their service providers could improve their IoT offerings and understanding.

"The research strongly indicates that MSPs need to significantly up their game and demonstrate enhanced levels of protection and control over their customers’ ever changing data and device needs," Foreman said.

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