Do CSPs’ future pivot on OTT collaboration?

The communications industry now realizes that Over the Top (OTT) players can be friends, not foes. Without them CSPs cannot take advantage of the app economy and will lose an opportunity to support an entire digital ecosystem. While they will, without doubt, try to win back dwindling revenues from voice and text that Skype, Viber and the rest are winning (Line in Japan is paving the way), co-operation is the key to success.

A recent TM Forum report points to ‘OTT collaboration’ being a major focus for CSPs over the next two years, with over 60 percent of those surveyed saying that this was one of the key areas that they will be supporting. Other partnerships were also high on the list. The question is, therefore, exactly how can a CSP add value to the relationship with an OTT player, such that they both make money and together offer compelling products and services to customers?

The answer is not a simple one. It will depend on individual circumstances and what is of most value to the parties involved. One thing is for sure though: the answer is not about ‘data’ – that is a term we must quickly get beyond.

In some instances, customer insights will be the key. Smart in the Philippines has built a customer insight platform, using analytics to build contextual pictures of what their customers are doing, their location and what their usage patterns are. Then they went to Facebook, Google and others and put a plan together. Facebook, for example, is now accessible to customers that were not reachable before, the billing and payment mechanism is in place and Smart was able to offer deals (and therefore make money) on Facebook access, which before was unattainable to a largely prepaid, low-income market.

Collaboration will happen in different ways, but one constant will be that the combined solution must make sense out of this ‘data’ word. One of the main reasons that customers, particularly low income customers, will not try data is that they fear that they will end up paying huge bills. Bill shock is still very much in peoples’ minds and is a barrier to greater app use, which can be leveraged by forward-thinking CSPs as a bargaining chip with OTT partners. Essentially, they both work on a win/win deal: subscribers access more apps, for greater periods of time and CSPs gain incremental revenue and brand loyalty every time they do so.

An excellent example of OTT players removing this worry from customers’ minds, by working with CSPs, comes from Bangladesh. In this case the CSP offers, say, ten YouTube sessions, 100 Facebook sessions and the same number of WhatsApp sessions for a set amount. The apps are zero-rated, Facebook gets more users and the CSP can begin to educate and reassure customers about data usage. There is a time limit on each session. As in this example, simplicity and clarity will always be key to customers understanding and trusting ‘data’ deals.

By working together in this way, the CSP has something that is easy to sell, instantly understandable and popular, and neither party gets into trouble from the threat of bill shock. OTT players have compelling products, CSPs have customer insights and billing and charging expertise.

Collaboration is definitely the way forward, the question is once we have seen these early examples become mainstream – and get copied – what happens then? It is one thing to offer introductory deals and zero-rated applications, it is another to take it to the next stage and tie customers into a ladder of compelling offers that instills trust, loyalty and therefore long term profitability.

If the guiding principle of tangible, real-time value for all players in the ecosystem is followed carefully then we all win.

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Mitch Klaassen
About Mitch Klaassen 2 Articles
Mitchell has 14+ years in the Telecommunications and IT industry with companies such as Nortel, Vodafone, Redknee and MATRIXX Software and across multiple technology domains. He has brought a wide array of technology experience and leadership to the areas of real-time BSS/OSS, Policy and Charging, Network Architecture Design & Product Management with strong focuses in the EMEA and APAC markets. He is based in Sydney and is the MATRIXX CTO for Asia Pacific.

1 Comment

  1. It would be ironic if the telco industry finally established some kind of viable collaborative business model with OTT players just as the rest of the world is stepping away from apps altogether. Every week I seem to come across something that suggests that other than the big half dozen or so – Facebook, YouTube, eBay, the game du jour (is it still Candy Crush?) – people are tiring of apps, downloading fewer, actually using even less, and for less time. Are the OTTS morphing into half a dozen giants who will be communication companies in their own right – like Facebook – and a vast hinterland of free apps that will never gather more than nickels and dimes from advertising? Is this still a game worth chasing for telcos?

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