Many surveys done on Telcos in the previous 4-5 years have come out with a result that the "OTT Problem" is the biggest challenge for them. Yet despite this heightened paranoia (or awareness of the acuteness of the problem), their record of dealing with this is very poor (or patchy at best). So what should these people do ? Here are my opinions:
First they should recognize that data & IP transport is the future. And it is their unique strength which is not substituitable globally. And hence they should endeavour to consistently built the highest capacity, low latency networks possible. Indian operators would be well served by moving to LTE and LTE-A (the actual 4G) rather than wasting their time with 3G (as the 3G adoption trend has already shown). Their is no substitution to their business unless leading IT service providers like Google, Facebook, Microsoft decide to build their own networks (unlikely as of now). The skill of deploying & running a ubiquitous network & reliable network that these telcos have, is hard to replicate by the IT srevice providers. Telcos have to become more ISP than telco. They have to also implemnet tiered data plans to maximize revenues from the 20% customers who use 80% of the network resources. The pipe is not free.
Secondly, they should push the democratization of smartphones and Tablets further in both urban, sem-urban & rural markets AFAP. As millions come out of poverty every year in this country the target should evolev from 100% voice tele-density to 100% data teledensity. More adoption & use will drive more network usage and will pay for their investments. Lets not be caught in the "whether the egg or the chicken came first" debate. Retail subsidize handsets and recover subsidy as you go, even if it means locking handsets to their networks and selling refurbished ones. Partner with banks to fund device purchases and so on.
Third comes the issue of dealing with OTT service providers. This first two things, they have to IMO irrespective of what strategys is followed for OTT. For OTT, their are many possibilities:
(1) Ignore them - IMO, this strategy involves ignoring OTT service players. The idea could be that whatever is the loss of voice and SMS revenues, it will be compensated with the growth in mobile internet revenues. This approach may work initially in countries like where smartphone tele-density is very poor, but cannot be followed in developed countries (usually population/subscribers are less and smartphone teledensity is very high) as it puts a theoretical cap on the revenue in the near future where there is no appreciable growth in subscribers. A stock market disaster for a publicly listed company if I may add. Also once the OTT network usage increases, the quality of service will suffer on account of delays, jitters, latency & overload (and teh operator would llikely not have thought about of ways in order to do traffic shaping, prioritizing of services and so on to optimize network usage). Not only the data users are increasing what what data they use is also increasing in size & resolution which will complicate these parameters by a multiple. A new Mobile operator can displace an incumbent operator easily if they can offer better networks (and they begin from being unloaded initially ..)
(2) Block them - This is a body blow to the subscriber who wants choice & freedom. And he will likely retaliate by trying to use WiFI and FBB AFAP. Its bad for the ecosystem as it discourages innovation. Subscribers are going to run away in hordes from this sinking ship. They will always have this complian that their friends are able to do so much on the move, while they are stuck with so little on the move. In many cases, operators might gang up & induldge in crony capitalism partnering the government to influence the regulatory environment in their favor smacking of protectionism. Its the saddest moment in nation's progress when the government of the day sells out to these chrony capitalists. In India also we have cases of protectionism with Interconnect charges and ban on VoIP to Phone calling, which is hindering the progress of skype-to-phone and Viber-Out.
(3) Compete with them - We have IMS to supplement LTE/LTE-A. It can be used as a platform to implement Rich Communication Services apart from spolving the Voice & SMS problem. Plus they can get into new business verticals of Multimedia (Video on demand, IPTV etc) and lately Cloud Computing infrastructure. While this is a natural reaction, one must ask if the innovation is just replicating things done elsewhe with a "Me-Too" approach or is their a serious long-term unique advantage in favour of the operators which cannot be overcome by OTT players. If the answer to the questions is NO, its better to avoid getting into such new business streams. We don't compete because we can but rather based on if we should. The Web has gone social. Communities are key on the web, not communications, and communications are being built around communities. These communities far extend the boundaries imposed by telcos. No states, no nations, just a global community.
(4) Co-opete with them (Co-create value together) - This is a promising option, but requires a lot of reengineering to the traditionally closed boxes made my Telco OEMs and opening up Telco networks to OTT service providers and Overlay networrks. For eg., A CDN (overlay or integrated) can be deployed for Youtube, Netflix etc which are highly bandwidth extensive (Youtube is 24% of Internet Traffic by volume!). This will improve the QoS of these OTT service, reduce load on their servers and optimize network efficiency. This will require some enhancement of existing NEs or deployment of Overlay networks). In return part of the B2B or B2C revenues of the OTT servoce provider have to be shared with pipe operator. Their could also be bandwidth reservation for OTT services to improve the QoS/QoE at a cost to the OTT service provider so that a best-effort delivery network can be converted into a more reliable and predictable delivery when required. You can see early forms of these trends like Play Store, where Google shares a percentage of its App Store revenues with operators but there are others like Amazon who have built on their retail business to include new streams like music streaming, VoD and lately Cloud computing on a completely "free" pipe. Get money out of people like Amazon is the tough task. DPI, BI and Traffic Shaping are very key technologies to realize this.
(5) Consolidation - Right now Telecom in India is not a very vibrant market and is actually bleeding a lot of players. The subscriber base in country is the second largest in the world (900 million presently). If carrier consolidate, they will have a larger subscriber base. Consolidation will not help conserve operating costs and improve profitability, but also give a huge bargaining chip to bargain with OTT players.
(6) Bundle them - I have seen Reliance do something like this. Connvert the fremium model of OTT services on FBB access to B2C on MBB. For eg., Youtube at Rs. xx/month till yy MB data limit and Rs. zz/MB beyond this or Unlimited WhatsApp at Rs. XX. The trouble with this model is that if a subscriber can avail this service free on another network (FBB+WiFI), then he will try his level best to avoid using the network where he is charged (and especially if the charges are high) and ultimately put a deflationary pressure on usage of this service of the network which charges for this service. If you price the bundle very low, it might encourage use but add very little to your bottom line or can't justify capacity expansion. You need to effectively monetize the 20% who load the network 80%.
(7) Develop new non-competing OTT business lines - For eg., operator can sell subscriber behavior data (BI) spanning multiple OTT & operator services used in the network to third party which can use that for targeted advertising.
(8) Partner OTT Players - The telco could collaborate with an OTT service player to implement part of the solution and share revenues. Its as if the operator is a VC in the OTT service player.
The number of possibilities may be more. I strongly believe that the innovation in Telecom market is not on the technology front (OEMs are in a position to evolve converged Web 2.0 and Telco 2.0 platforms) but one the business front, because the disruption is on business, not technology. My personal opinion is that he new emerging business model of telcos will be very dynamic, adapting & changing as the OTT players rise or sink. The old order of one business model is probably dead already. Working together in some way with the OTT player is the way forward.
At the same time, I feel that OTT Service providers have to be responsible enough to implement critical regulatory policies like lawful intervention which is critical and justifiable requirement in countries like India. National security cannot be jeopardized in order to be progressive and the if the OTT players are not complying with this, they are only putting roadblocks in their own path to success in the market.
No comments:
Post a Comment