OTT players – partners not opponents, now manage that!

 The communications industry is now convinced that Over the Top (OTT) players are better partners than opponents. The question is becoming ‘how do you manage the relationships?’

Both sides, according to a recent Telecoms.com survey and industry discussion, see the benefits of collaboration. The benefits for operators lie in the range and variety of services on offer, for which, at the moment, they receive little, if any compensation.

Ad-for-BVsThe benefits for OTT players come in the form of QoS guarantees, a reliable and regular billing relationship and, of course, zero rated data for Facebook and other…

Ah.

So collaboration to some might mean giving access and data away for free. At a recent communications summit in New York, Facebook COO Sheryl Sandberg asked Vittorio Colao, CEO of Vodafone whether he would do her a favour and provide free internet access in emerging economies. His response was why would he want to do that? Particularly when the social media site wants to launch a money remittance service, presumably not for free.

Some collaboration makes perfect sense, though.

AT&T’s announcement earlier in the year (a BSS announcement at a Consumer Electronics Show, no less!) that it will be offering sponsored data caused quite a stir. Mainly the stir was positive, but some cried that it was unfair to companies that could not afford to pay the sponsorship. Sadly not everyone has the marketing budget of Procter and Gamble, but most still seem to survive.

A recent survey by Wakefield in the States reveals that the majority of US smartphone users are keen on the idea of sponsored data. Keenest are young adults and adults with children. Both groups either hit their data limits on a regular basis – some just by watching one streaming video a month, others quite possibly by leaving a tablet around while boiling the kettle – or do not use certain apps that 82 percent of the 1,000 strong survey group believe will take them over their limits.

Presumably the survey was done on a slightly hypothetical basis, since AT&T’s first iteration is to attract sponsorship for advertising not for entire pages or sites. This, also presumably, is designed to enrich the online promotion and shopping experience.

Sponsored data will be a major topic of discussion for the next year or two. As will the whole area of collaboration between communications service providers and OTT players. The relationships will come in many forms and the variety of services offered by OTT players will, in itself, promote innovation in the communications market and beyond.

Years ago, when partnerships were relatively new to telecoms companies, managing them seemed easy. Whether roaming partners, MVNOs or banks, many operators thought that they could manage them on a spreadsheet. Mind you, many, if not all, billing managers have a master spreadsheet stashed away somewhere, just in case.

As things got more complex, operators talked to their vendor partners, asking for advice and expertise to make sure that the spreadsheet could keep up with the workload. Slowly the realization crept up on them that they needed industrial grade systems to manage the explosion of partnerships, agreements and the sheer variety of contracts. And along with those systems another layer of systems emerged that looked after the fraud and revenue assurance issues.

This time is no different. As partnerships between operators and OTT players become the norm, the relationships, revenue sharing agreements, commissions and promotions will be, if anything, more complex. Much more complex.

Over the next year or so we will see a proliferation of a new breed of partnership or collaboration system emerge to manage the new wave of innovation that will be born through collaboration.

 

 

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Alex Leslie
About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

1 Comment

  1. I’ve been watching this idea of sponsored data emerge for about 6 years now. It’s a nice idea, but appears to be extremely hard in practice. Arguably, the gap is widening not narrowing, except for a handful of special cases.

    Even zero-rated data is hard – a recent announcement by Uninor in India said that its “free Facebook” offer needed several months of integration work by both companies, to work properly, because there are multiple ways that people access FB – different apps, mobile browsers, mashups and so on. All of those change & evolve, so presumably the systems will need to keep up with the app/website evolution too. And that’s just for the “free” model, which the telco hopes will be compensated by more data-plan signups in a less-mature market. Actually getting Facebook (or anyone else) to pay cold hard cash is even harder.

    The problem is worsened by the fact that most smartphone users (in developed markets) get 70-80% of their data traffic via WiFi (free at the point of use) anyway. And a content or app player would need to cut deals with multiple SPs to reach their whole customer base with paid-data, each likely to have a different pricing & network policy model.

    Add in the fact each device uses different amount of data (because of screen resolution, OS & app version etc), and a lack of reporting mechanisms (“did I get what I paid for?”) and it all gets messier still.

    There’s a couple of niches where this might work – eg advertiser-sponsored models. Nobody wants to *pay* for the privilege of being advertised “at” or spammed, so the brand picking up the data bill might improve their image among consumers. Conceivably some cloud companies might do this as well – although it’s likely to happen first in the fixed domain rather than mobile, where it’s easier to measure.

    I’m currently writing a research report on these type of business models – the early conclusion is that there’s still a lot of wishful thinking.

    Dean Bubley
    @disruptivedean
    Disruptive Analysis

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