Can Building Partnerships with OTT Players Actually Improve Telco Revenues?

Voice and SMS revenues are declining dramatically for communications service providers (CSP). Telco 2.0 expects SMS revenues in Europe and the Middle East to drop 40 percent by 2015, while Strategy Analytics predicts that CSPs around the world will lose about $3 billion in revenue between 2012 and 2017.

And where’s all the money going? To over-the-top (OTT) providers that offer consumers third-party ways of messaging. Apple, Facebook, Skype and WhatsApp are just some of the players in the space. OTT messaging just keeps getting more popular, too. By the end of 2013, Informa Telecoms & Media estimates that OTT messages will be double the number of peer-to-peer SMS messages.

Neutralising the Threat

One trend that has seen some adoption has been the shift to reversed, limited to unlimited bundles. International telco efficiency specialist, tefficient recognized that between 2010 and 2012 as data demand showed significant growth, the OTT monetization opportunity had increased.

At the same time, operators started to reverse their mobile bundle offerings in terms of voice and data. The studyrevealed that instead of packaging limited voice minutes and SMS with unlimited data, operators increasingly limited the amount of inclusive data while making voice and SMS unlimited. Of course this has the effect to neutralise the OTT threat and supporting the opportunity for operators and OTT’s to partner.

CSPs remain understandably worried about this new competition, but most aren’t sure how they can solve the problem. Yet one Australian operator, Telstra Global, has a solution: improve the customer experience and bundle services.

Competing Directly with OTT Services

A good number of CSPs have been trying to quietly ignore OTT providers, because they’re not quite sure where to start when it comes to developing a competing solution. Telstra Global has discovered that it’s just a matter of building the right service packages and the right partnerships.

Martijn Blanken, managing director, told Total Telecom that there is “a way to beat” OTT services like WhatsApp, and it comes down to packaging things differently. That’s how Telstra Global has been able to protect SMS revenues as the technology evolves. Blanken noted, too, that OTT providers need the connectivity and network power that CSPs can offer, which can pave the way for strategic alliances that can benefit everyone.

More than anything, however, Blanken emphasised customer service. “The true differentiation will be the customer experience,” he told the news outlet, and everyone from every department will have to be involved.

Packaging Services in a Way that Works

We’ve long believed the same thing – these days, customers are looking for the best possible experience from their CSPs. Research from Vanson Bourne shows that nine out of ten consumers want more personalised interactions with their mobile operators. The advantage that traditional mobile operators have over OTT services is that they know their customers already. It’s just a matter of leveraging big data analytics to create an individual experience for each customer.

If CSPs could use technology like predictive analytics to anticipate mobile habits, then it would be possible to create unique service packages that are superior to OTT models. Automatically sending a customer a relevant solution delivers a great experience that he or she is very likely to remember. As personalisation becomes the norm for customer service, big data analytics will allow CSPs to create new revenue streams and, best of all, work with OTT services to deliver next-generation customer experiences.