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

Posted: November 9th, 2012 | Author: | Filed under: Industry Insights, Telecom Trends | Tags: , , , | 1 Comment »

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

Posted: March 22nd, 2012 | Author: | Filed under: Around the World | Tags: , , , , , , , | 2 Comments »

RCR Wireless News…
Latin America Counts 32 HSPA+, 5 LTE Networks
According to a 4G Americas report, Latin America is increasingly deploying HSPA technology and rolling out LTE. Currently, the region has 72 commercial deployments of HSPA technology in 31 countries, with five commercial LTE networks and 300,000 LTE connections expected by the end of 2012.

Along the same lines, the Global Mobile Suppliers Association (GSA) recently published a report showing that 300 operators worldwide have committed to commercial LTE network deployments or are engaged in trials, technology testing or studies. This is a significant increase—50 percent, in fact—over the previous year.

The LTE evolution is clearly catching on in Latin America, just in time for the region’s networks to be ready for the data boom expected during the World Cup in Brazil in 2014.

TelecomsEurope…
CEE Operators on the Ball in OTT and Connected TV
Over the past year, there has been an explosion of activity in the Central and Eastern European (CEE) online video sector, with operators jumping head first into new market opportunities by offering a variety of new services.

Informa Telecoms & Media forecasts that online video Internet traffic in the region will account for 27 percent of total Internet traffic by 2015. Additionally, the number of connected devices is set to dramatically increase, and the growth of such devices will continue to fuel over-the-top (OTT) service launches. However, operators are increasingly adapting when it comes to OTT services by investing in the development of full multi-screen services to attract subscribers and, in some cases, by teaming up with OTT providers.

The boom in OTT offerings provides an opportunity for operators to embrace innovation and introduce new value-added services. Do you think operators are able to effectively collaborate with OTT players to create mutually beneficial offerings that will appeal to customers?

CommsMEA…
A Busy Agenda
In 2011, the telecom industry came to terms with two major global shocks—the global economic downturn and the disruption caused by mass digitisation. The downturn accelerated the commoditisation of traditional telecom services, pushing operators to cut costs and increase efficiency. The digital boom encouraged operators to boost network capacity and connectivity, and introduce new services that take advantage of mobile payment platforms and cloud computing.

Due to these global changes, the telecom ecosystem is becoming much more competitive as new players from adjacent industries and technological innovation challenge operators. This year, operators will spend more on infrastructure as 4G/ LTE goes mainstream, and make strategic choices by leveraging existing capabilities and building new ones.

With the unprecedented choice of services and devices, customers will likely emerge as the winners of the drastically changing telecom landscape—do you agree with this prediction?


Mobile World Congress Recap: Informa Telecoms & Media Webinar Highlights

Posted: March 9th, 2012 | Author: | Filed under: Events, Telecom Trends | Tags: , , , , , , , , | 1 Comment »

There’s been much buzz around last week’s Mobile World Congress, and Comptel can attest to the thought-provoking discussions and ideas that were generated at the show. Analyst firm Informa Telecoms & Media recently held a webinar recapping the main themes and hot topics from Barcelona.

One key takeaway was the emergence of global players including over-the-top (OTT) providers, card networks and device manufacturers. According to Informa, these players stole the headlines and are now dominating the agenda for the telecom industry, as operators are becoming their local partners and distributors. They went on to say that with OTT players, operators must strike a balance and find a way to work together, but just how they will effectively do so is still in the works. An example of this balance coming to fruition is Facebook’s decision to work collaboratively with operators in the billing process; however, the keynote sessions indicated that there is still some friction in the operator/OTT player relationship. For instance, OTT providers are generating revenue by using traffic from operators’ networks, which is a sore source of contention.

Further, Informa noted that operators were focusing less on technology and more on the role of pricing to appeal to consumers. Some of the interesting discussions were around the concept of moving away from unlimited pricing models toward those that are much more value-centric. At the show and over the past year in fact, there’s been much talk about this change, but some operators are struggling with implementing it largely because of challengers still pushing the unlimited model. However, other operators have revealed that a successful tiered plan is possible if the pricing is structured correctly and the value proposition is effectively communicated to consumers.

In all, Mobile World Congress was a great meeting of the minds, and we’re certainly looking forward to seeing how these developments unfold in the coming year. Which trends did you find most interesting at the show?


Three Certainties in Life – Death, Tax and CSP Cost Reductions

Posted: November 25th, 2011 | Author: | Filed under: Events | Tags: , , , , , | 2 Comments »

A trip to Orlando in November to experience the weather of an English summer had the added bonus of finding TM Forum’s Management World Americas in the wonderful Peabody Hotel and Conference Center.

Some clear positivity has been demonstrated in the telecoms IT industry over the last year. The “Cloud” has been gaining further momentum, machine-to-machine (M2M) is finding new innovative applications across enterprise verticals, and communications service providers (CSPs) are realising the value of eco-system-delivered services.

Amidst rapturous applause, Martin Creaner opened Management World Americas by acknowledging (for a change) that we all knew what challenges are facing CSPs and the market, and that vendors and OSS/BSS solution providers should be getting on with delivering innovation. He stressed that the event was all about putting competitive engagements to one side, collectively learning how peers are addressing challenges and how, by sharing ideas one or two times a year, everyone could really contribute to creating a better world—quite profound and worthy of a Nobel Prize, I think!

To summarise a relatively light-hearted introduction, Mr. Creaner recommended the following points of wisdom and focus for the coming year:

  • CSPs will be concentrating on growing new revenues to combat declining asset value, whilst maintaining customer experience to minimise subscriber churn.
  • New revenue streams will come from clever product bundling and marketing, service enhancements, such as location-based services, plus some early adopter M2M innovations (e-health etc.), which are great ideas but carry investment risk if they are not successful.
  • Over-the-top (OTT) players are here and will not be going away, so CSPs need to fight for their place in the value chain. Making a broader portfolio available in the broader market is key, such as offering diversified services within the cloud.
  • CSPs need to leverage their assets and operational experience to become cloud service brokers.
  • Death, tax and CSP CAPEX/OPEX reduction are the three certainties in life.

What Can Developed Market Telcos Learn from Emerging Markets?

Posted: August 16th, 2011 | Author: | Filed under: Industry Insights | Tags: , , , , , | 1 Comment »

By: Andy Hicks, Research Manager, EMEA, Telecoms, IDC

By this point, most of us know how dramatically mobile communications have affected the emerging markets, bringing services and information to people who previously had only tenuous links to the larger world. Mobile payments have brought elementary financial capabilities to millions of people formerly dependent on cash. Newly available information on markets, agricultural practices, government services and health have also eased and enriched users’ lives. Communications service providers (CSPs) are offering discounts based on the current usage of individual base stations, stretching their customers’ money and taming network congestion.

The speed of development in emerging markets leads some commentators to proclaim that we live in an era of “reverse innovation,” where things happen first in developing markets and then are exported to mature markets. I’ve never liked that term, which both flirts with condescension and seems to ignore the fact that, from the beginning, the work that went into most of these services occurred in markets developing and developed alike. But what of the central point? Have telecoms in emerging markets produced products or practices that could improve the business of CSPs in the developed world?

At first glance, maybe not. Mobile networks in Sub-Saharan Africa can double as point of sale networks because thereias no established competition, and because regulators are willing to grant them some leeway in order to extend financial services to the unbanked masses. In the developed world, telecoms networks will never supplant the established clearinghouses. Instead, the industry is focussing on enabling Near-Field Communications (NFC), which, in turn, require a level of infrastructure rarely found in emerging markets. And probably the industry’s biggest worry—competition with over-the-top players— has been a non-issue in emerging markets, since few people can afford data subscriptions. Basic pocketbook issues have meant that in low ARPU areas, it’s a 2G revolution.

But if you break down the emerging market success stories, you start to notice that many of the best practices are found on the IT side of telecoms, whether in charging or basic service design. Here, briefly, are three lessons I think we can draw from emerging markets:

  • Compelling services are real-time services. Given the predominance of prepaid in emerging markets, it’s no surprise that real-time capabilities are so prominent. The dynamic tarriffing I referred to above relies on real-time analytics and discounts to direct users to less-trafficked cells. In developed markets, a few CSPs are experimenting with similar capabilities for their data networks, both pre- and post-paid.
  • Usability is even more important than you think. Everybody mentions Apple when they want to talk about design, but when your transport is SMS and some of your user base is illiterate, making your tasks lightweight, universal and fool proof is a necessity. Developed world users flock to well-designed functionality as well. And optimizing communication between the client and the data centre is still very much an issue in telco services.
  • Identity management is a key telco asset. If anything, it’s even more important in developed markets, where the telco has less of a natural place in payments value chains and where fraud can produce much higher damages in absolute terms. When NFC availability depends on vendors and the transaction is cleared by somebody else, the ability to certify a user is a natural capability of the CSP—until OTT players capitalize on foot-dragging to take over that function, too.

There are almost certainly others. Think of it this way: emerging market CSPs are running smart pipes over voice/SMS. Anybody in carrier IT can draw inspiration from that.

Andy Hicks covers telecom software, services, and business strategies in EMEA, with special focus on emerging markets, at IDC. Currently, he is focussing on the IT-ification of telecoms, the increasingly complex services market they compete in, and the work of multinational groups to rationalize their operations across borders.


Survey Says: Close Customer Focus and Real-Time Data Analysis Key

Posted: July 7th, 2011 | Author: | Filed under: Telecom Trends | Tags: , , , , , , , | 5 Comments »

In addition to organising an industry analyst day and customer / partner presentations, Comptel moderated an interactive session focused on the customer experience during last month’s Comptel User Group (CUG). The session, which involved our partners Cisco and Alcatel-Lucent, surveyed nearly 100 attendees on the evolving state of the customer experience, the role network and other service data and OSS play, and the significant potential revenue opportunities for communications service providers (CSPs). Like our past research, it yielded quite interesting results!

Respondents first indicated that they believe CSPs, when compared to over-the-top (OTT) players, device manufacturers and operating system companies, provide the best customer experience. However, as Cisco’s Russ Kaufmann brought up, OTT players have a head start in providing good customer experience for cloud services. Alcatel-Lucent’s Pierre Dubost also made a good point—if asked the question of who provides the best customer experience two years ago, there likely would have been a very different answer. But, CSPs are really trying to invest in customer care and focus on driving brand loyalty rather just pushing products.

Supporting this, nine out of ten participants pointed to customer experience management as one of the major factors contributing to operators’ survival and success—because as Kaufmann pointed out, when things do go wrong, it can greatly affect churn. These responses support those of a Comptel-sponsored Vanson Bourne survey, which previously identified customer experience management as a significant potential revenue opportunity. Eighty-seven percent of consumers said that their quality of experience influences their allegiance to their CSP, and the majority of them would not only move but also pay more money for faster, more personalised services.

While the importance of a high customer experience was clear, there was general agreement that it’s difficult to determine what exactly will satisfy each customer. More than half (55%) of participants indicated that network performance has the greatest influence on the customer experience, yet all of the other responses varied. Dubost was right in saying that all of these factors are impactful—ultimately, CSPs require a holistic view of customer behaviour in order to better manage (and take the necessary actions to ensure) the customer experience.

Clearly aligned in thought, 100% of survey respondents recognised the value of leveraging network and other service data and their OSS; however, only about one-third of CSPs noted that they are fully utilising this information. There is a huge opportunity for operators to gain superior insight into customers and improve end-users’ experiences. With real-time data analysis and a close customer focus, CSPs can also boost their bottom lines, for example, through profiling for targeted marketing campaigns and traffic shaping for premium services.

Comptel is excited to see how operators take advantage of the opportunities a real-time, interactive and personalised OSS platform presents. What do you think of the interactive session discussion? For more information about the survey results, please contact comptel.marketing@comptel.com.


Around the World

Posted: June 28th, 2011 | Author: | Filed under: Around the World | Tags: , , , , , , , , | Comments Off on Around the World
Connected Planet…
The Singular Solution to Bill Shock: Think Like the Customer Thinks
Alex Leslie discusses bill shock and the various approaches operators are exploring to avoid it. In light of increasing mobile network use while abroad, some companies are looking into charging for content per email, game or app instead of buying bandwidth in a bundle, but due to the variety of actions and complexity of pricing each one, this isn’t ideal. Another option involves implementing a flat-rate data plan; this may be attractive to operators but compromises network quality by the few users who consume too much bandwidth. And although it might seem like a perfect solution, capping network usage often leaves customers wary about watching what they eat. As Alex states, whatever the bill shock solution may be, operators should make it a priority to put themselves in their customers’ shoes. Bill shock can have a heavy impact on the customer experience, and it more than often leaves a bad taste in subscribers’ mouths. As we discussed at the Comptel User Group, operators really need a real-time, interactive and personalised OSS platform that can deliver superior insight into customers’ wants and needs, proactively manage their frustrations and prevent churn—all to improve their experience.

Telecoms.com…
U.S. State Bill to Push for Clearer 4G Definition
New legislation, the “Next Generation Wireless Disclosure Act”, was recently introduced in the U.S. senate—if passed, the bill will enforce operators to more clearly state the capabilities and coverage of their networks. Supporters of the bill say they hope to clear up confusion caused by the blanket marketing of all types of next-generation networks as 4G, regardless of the technologies on which they are based and the speeds they actually deliver. The proposed legislation also states that providers and other sellers of advanced wireless mobile broadband services will need to make “accurate and reasonable disclosures of the terms and conditions of such service in order to give consumers the necessary information to make informed decisions about such service.” Setting clear expectations from the beginning—and being upfront with customers about their coverage, minimum speeds, data caps and potential performance issues—will only help enhance the customer experience.

SearchTelecom.com…
New Service Needs Drive Changes to Telecom Data Center Architecture
Tom Nolle believes that because competition with over-the-top (OTT) providers will keep service prices low and revenue margins thin, operators need to evolve their telecom data center architectures in three phases. By undertaking the following distinct steps, operators can ensure that growth in their priority areas (content delivery, mobile services and cloud services) will not be hindered.

1. Deploy blade-server farms using generic servers that run Linux. This phase will support cloud computing and early content needs, and over time, operators will integrate OSS/BSS elements from their existing architectures to improve operational efficiency.
2. Migrate to fabric-based interconnection of storage and servers. The combination of OSS/BSS and feature reuse is likely to be the largest driver of change for telecom data center networking.
3. Connect data centers into modular clouds. It is not yet clear how far or fast this last phase will advance.

Do you think the telecom data center architecture evolution is feasible? Are there any other strategies operators should consider to keep up with the OTT model?