Over-The-Top – play, an opportunity for communications service providers?

Over-the-top-players (OTT) have been seen as a big threat to the traditional Communications service Providers (CSP).  In short, the traffic generated by the OTT players is congesting the communications networks in which the CSPs have invested hundreds of millions of Euros, while the same OTT players also bring home most of the revenue streams. The Telco industry has been discussing the topic already for quite a while now, and – as often – the market and business disruptions have been seen as a threat rather than an opportunity.

As an example, CSP executives around Europe and the Middle East gathered at a conference in January 2011 to share experiences on how to compete with Google, Skype and others, that is, the dreaded, revenue-hoarding global OTT players. (Source: Global Telecom Business). Other commentaries, such as this from Ovum,  remind the CSPs that they should rethink their business model and become a part of the OTT value chain. The list of similar examples just goes on.

Let’s recall some of the earlier disruptions to see if there is anything we could learn.  Although the Mobile Virtual Network Operators (MVNO) phenomenon was more or less a local disruption while the OTT players of today are truly global, there might be something worth noticing from those days. Many of the MVNOs in the early phase were established in an opportunistic manner to cash in on the disruption quickly, while trusting that the traditional CSPs will buy them out simply because CSPs should see them as a competitive threat. This also happened in many markets.  After attempting to fight against the grain, many CSPs started to see the MVNO business model as an opportunity, although with the strong encouragement of regulatory bodies . Some CSPs have taken the role of selling the network assets to the MVNOs and some have built their own MVNO business to differentiate within specific customer segments. A good example of the differentiation strategy is E-Plus, who still in June 2012 was the jewel in KPN’s crown. E-Plus established its own MVNO, Ay Yildiz, with a segmented offering to several million (statistic vary from 2.5 to 4 million depending on the definition) Turkish people in Germany, who communicate with their relatives inside the country and between Turkey and Germany.

Some of the leading CSPs have taken similar steps in capturing the OTT opportunity rather than seeing it as a threat. Naturally, there are multiple approaches. One good example is Telefonica whose Jose Valles explains how Telco’s are in a unique position to take advantage of opportunities to facilitate OTT services through their relationship with users. The example by Zain Deputy CEO and COO, Hisham Akbar, is another instance of the CSP leveraging their competences and assets to build a whole sale service.  Zain sells network infrastructure to other players to deliver a wider variety of OTT-type of services and applications to Zain’s customers.

Where there is a threat, there is also an opportunity. However, it often requires the courage to go for the opportunity instead of fighting the inevitable change.

Around The World

GigaOM…
Why Are MVNOs So Hot Right Now? Thank the Carriers

The number of mobile virtual network operators (MVNOs) nearly died out in the past decade due to over-segmentation. Today, however, they are making an astounding recovery by reselling bundled voice and data services at affordable prices. According to GigaOM journalist Kevin Fitchard, “MVNOs are thriving because the big network operators are letting them.”

Historically, the larger operators made it difficult for MVNOs to take advantage of their data networks. They would charge prohibitive rates and force partners to pay for megabytes up front. But the market has recently changed, and operators like AT&T and T-Mobile are selling more airtime, while others are working directly with MVNOs to craft plans in exchange for a percentage of revenue. There are pros and cons to working with each operator, but it’s clear this shift is benefitting MVNOs.

The trend, however, hasn’t been as good for operators who risk losing their competitive advantage. The article points out that they, most likely, either feel forced to cooperate or are trying to reap the wholesale benefits of selling to MVNOs. Ultimately, these types of customised offerings and bouquet of service options benefit customers that now have more choices when it comes to selecting their network operators.

Pipeline…
Moving Customers to Tiers

Data capacity and bandwidth constraints continue to be a major concern for communications service providers (CSPs).  According to Cisco, the consumption of over-the-top (OTT) video is predicted to quadruple by 2016, at which point more than 1.2 million minutes worth of video will be travelling through the Internet every second. Additionally, as smartphone quality increases so too does their use for bandwidth-intensive activity, like video streaming. And as users are increasingly becoming data-centric, CSPs must figure out the most effective method for implementing controls on usage.

Some operators, like Comcast, are offering tiered data services to manage the network. While this may be a viable option, it’s also likely that subscribers will push back on this change in plan. However, keeping customers satisfied could simply come down to the variety of tiers a provider is offering like charging based on the type of data used instead of the volume, or paying more for priority data during peak hours. Ultimately, CSPs have the ability to differentiate diverse types of data in ways that they never have before. This means more targeted services and the potential to really stand out in the market.

What options other than tiered pricing do you think can be effective?

MarketingLand…
Airlines & Telecom Companies Are Best At Facebook Page Customer Service

A recent study revealed telecom and airline industries are tops when it comes to providing customer service on Facebook. T-Mobile and Sony Mobile were the most active brands in responding to customers and prospects, while telecom companies showed their customer-centricity by replying to 60.4% of user posts between March and May of this year.

This is crucial as Conversocial, a social media tracking site, indicated in a recent study that 88% of consumers are less likely to buy from companies that ignore complaints on Facebook. It’s clear customer service should play a key role for CSPs not just on social media channels, but also as a standard practise throughout the business. For instance, CSPs can tap into the customer data they have on hand and determine – at an individual level – who to engage with, the right message to use, and the right time to do so. They can also monitor for issues within the network and proactively reach out to customers– before they head to Facebook to address the issue, the CSP has already responded. Now that’s customer service!