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You can think of an over-the-top application as anything that disrupts traditional billing models - from telcos or cable/satellite companies. Examples include Hulu or Netflix for video (replacing your regular TV provider) or Skype (replacing your long distance provider).
The creation of OTT applications has led to a wide-ranging conflict between companies that offer similar or overlapping services. The traditional ISPs and telcos have had to anticipate challenges related to third-party firms that offer over-the-top applications. Think, for example, of the conflict between a company like Netflix and a cable company. Consumers still pay the cable company for access to the Internet, but they might get rid of their cable package in favor of the cheaper streaming video over the Internet. While the cable company wants to offer fast downloads, there is an inherent conflict of interest in not supporting a competitor, like Netflix, that bypasses cable's traditional distribution channel.