This guest post was written by Andy Cocks, CTO, Dimension Data (Asia Pacific)
Over-the-top (OTT) content and service providers that monetise traditional service providers’ infrastructure — fixed and mobile infrastructure in which these operators have invested heavily — are shaking things up in an already competitive market.
OTTs are using software-defined networking and virtualisation to reap the benefits of the infrastructure and access networks of bigger players — with great success. The new forces in play are gaining a lot more awareness from traditional service providers.
Respecting the edge
I believe that instead of seeing OTTs as a disruptive threat, service providers should see it as an opportunity to be more agile and do greater things for their customers. Technology, as always, is the key to unlocking the opportunities of this new landscape.
At the moment, we’re witnessing a change in the market. Mobile service providers are under a lot of pressure to reduce costs in their network and keep pace with new challengers, such as OTTs. Because OTTs don’t need to maintain complex network infrastructure, they have the ability to build flexible and elastic delivery frameworks.
This agility allows them to react to the changing requirements of users and provide services at low cost and, in some cases, for free supported by advertising. The demand for these services is growing, as consumers access more video, entertainment, social networking and so forth.
The big picture
Right now, the way I see it, service providers shouldn’t become embroiled in an internecine war with what they see as wily interlopers in their market. Although OTTs don’t contribute to licensing fees or network infrastructure investments and are seen to cannibalise service providers’ revenues, a synergistic approach is perhaps the better route. Service providers have more leverage when they choose to work more closely with OTTs. Perhaps this change can be a catalyst to launch innovative new business models?
In short, service providers need to find ways to make deals that will allow OTTs on their networks and generate revenue from subscribers that add value to their communications. The OTT channel is very narrow when it comes to subscriber intelligence and this is where the service providers can add substantial value as they own the ‘big picture’ across all the channels a subscriber is using.
The more eyeballs, the better
OTTs also rely on subscriber numbers — or ‘eyeballs’ — for their market capitalisation. Working with service providers on service and business models that allow them to boost the number of eyeballs may be mutually beneficial. An OTT service that’s provided free of data charges to subscribers, and subsidised by the OTT, will increase a service provider’s competitiveness in the market without foregoing revenue.
The problem we see is that, because of a locked, static proprietary hardware environment, many service providers don’t have the flexibility in their networks to cater for these new business models. And waiting six months or even a year to implement the technology to support a new service or model is very frustrating for both sides. Many service providers are seeking ways to virtualise their networks — to be more agile, flexible, and elastic — so they can quickly bring on new services and change them as required.
Into the shiny world of virtualisation
Virtualisation opens the door to software-driven solution deployments rather than the traditional appliance-based approach.
This is, of course, easier said than done. One just has to take into account inhibitors — purchasing cycles, requests for proposals, and stringent service level agreements — to understand that in this new landscape of telecommunications, service providers don’t always have the capability to co-operate with OTTs, generate revenue, or launch their own similar services to outclass an OTT.
Going forward, service providers need to make changes in their network to drastically reduce cost and at the same time create flexibility to launch these services. Virtualisation is the route most that looks most promising to achieve this. The caution is not to enter this shiny new world of virtualisation with one single vendor as your partner. Different technology partners can deliver different solutions that cover various functions cost effectively and provide differentiation.
Ultimately you need an intimacy with technology, a deeper understanding of the pitfalls and opportunities technology can offer and, most importantly, understand the type of value you want to deliver to your subscribers.
It’s a whole new world happening out there and you need to make the right choices at the right time.