OTT providers: Competitors or collaborators?
Over-the-top (OTT) players have been seen as something of a thorn in the side of carriers, since their arrival in the market heralded an end to the exclusivity they held over the customer relationship.
Over-the-top (OTT) players have been seen as something of a thorn in the side of carriers, since their arrival in the market heralded an end to the exclusivity they held over the customer relationship. Research shows that nearly half of 16-24 year olds use apps like Skype and FaceTime to reduce phone bills, eroding carriers’ core voice revenues. Furthermore, bandwidth-hungry services like YouTube place a huge drain on network capacity, forcing carriers to invest in infrastructure to support demand and maintain customer experience.
However, analysis of OTT data is creating new opportunities for savvy operators to exploit. OTT applications add value to the customer experience and drive more users to engage with their mobile devices; the key challenge for carriers is monetising this opportunity and getting their share of the revenue. Rather than trying to compete directly, carriers can share in the revenue generation by identifying the areas in which they can add value to OTT services.
For example, carriers are beginning to set up new toll-free data services for content providers, such as the one recently announced by ESPN; where the content providers pay for a specialised access line so they can provide subscribers with a higher quality of service. It's similar to a toll-free calling service in which a company buys an 0800 number for consumers to avoid racking up long-distance charges. Carriers and OTTs can also collaborate to provide OTT-funded free services. For example, 02 might offer customers tariffs that include unlimited access to YouTube outside of their data allowance. YouTube would then pay 02 for this service, as it would be helping to drive more traffic to its site, and in turn, increase its advertising revenues.
Another area where operators can add value is by providing critical metrics on OTT service performance and customer engagement. Carriers can use Big Data analytics to gain a very granular view of the impact of OTT services on their network, allowing them to see if there are certain areas that experience heavier traffic; where is it driven from, at what time of day, and from which devices. This is valuable information that operators can sell on to OTT providers, which can be used to deliver more targeted marketing efforts, enabling them to boost the advertising revenues that are central to their business model.
With such a collaborative approach, operators and OTT providers alike will be able to significantly enhance their capabilities and service offerings.
Furthermore, by placing customer data at the heart of this strategy, carriers can ultimately create a win-win scenario for all involved. OTT providers can enhance their service offerings and profitability; operators can ensure that they are able to enjoy their share of the returns, whilst consumers will receive services that are more tailored for their specific needs.
Far from being just a ‘dumb pipe’, carriers will be regarded as innovators behind this shift; connecting service providers and customers in new ways that will enable a more personalised data economy.