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How Telcos Can Deal With OTT

Ray Le Maistre

One of the big questions for communications service providers (CSPs) today is: How should they deal with the threat of OTT? One obvious answer is that they should look at the undeniable and unstoppable demand for third party/OTT apps and services as an opportunity to make money. How? By doing what Telenor ASA is doing -- using its billing/charging platform and large customer base to get a cut of the money that its subscribers spend on Google apps. Quite simply, CSPs have large customer bases that trust them on a billing relationship level (even if they hate them on a customer service level, it should be noted). The CSPs also have billing/charging platforms and a wealth of information about their customers. As a result, it makes sense for the CSPs to enable their customers to buy all manner of goods and services using their mobile (or fixed) services subscription, with the value of goods and services bought added to their bill. The CSPs take a cut of the transactions, their customers don't have to forge a financial relationship with another company and the third-party companies/OTT players can focus on marketing their goods and services. That's what Telenor is doing in Norway: The operator's Android smartphone customers can buy apps and services from the Google Play store and charge it to their mobile accounts in a simple and secure transaction. It makes sense, which is why the likes of Telenor and Telefónica SA (and many others) are going down this route and why companies that provide the billing mediation platforms that sit between the telcos and the content/services/goods suppliers are going to be hot property. Companies that have developed "direct carrier billing" capabilities include Bango Inc., Boku Inc. and MACH. (See Bango's Influence Just Got Bigger, Telefónica Invests in Payments Partner and MACH, payvia Team on Carrier Billing.) As an interesting aside, Bango has relationships with both Google and Telenor, yet the direct carrier billing engagement between the Norwegian CSP and Google does not involve Bango. Instead, it was brokered by the team at Telenor Digital Services. So what is the market opportunity for the telcos by embracing a "direct carrier billing" strategy and taking a cut of the resulting OTT action? Analysys Mason estimates that by 2022, CSPs can generate US$12 billion in revenues from such transactions. The alternative? CSPs can develop rival apps and services, try to do everything themselves and keep all the money. But we all know that is a strategy that will lead to a slow and painful death. — Ray Le Maistre, International Managing Editor, Light Reading

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User Rank: Light Beer
4/1/2013 | 4:27:17 PM
re: How Telcos Can Deal With OTT
Doesn't this lead to the path where LD providers took us. Suddenly there are providers on our bills and we have no responsible party? This is a bandwagon best left alone.-á
User Rank: Light Beer
3/22/2013 | 12:25:02 PM
re: How Telcos Can Deal With OTT
Excellent points. Consider also this: Three quarters of smartphone traffic is not running on mobile broadband networks, it runs on Wi-Fi. The way forward is for cellular operators to take (part of) this back - OTT or not. And the way to take it back is with carrier-class Wi-Fi and seamless Wi-Fi services :-) I rest my case.
User Rank: Light Beer
3/22/2013 | 3:12:13 AM
re: How Telcos Can Deal With OTT
How does the telco deals with OTT providers in terms of financial transactions. I understand that customer gets a rebate in downloading the applications from using the provider but how is the relationship between Telcos and OTT providers stay alive?
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