Light Reading

How to Fight the OTTs

Jason Meyers

Visitors to Light Reading's Big Telecom Event last week heard an awful lot about SDN and NFV, so they were probably relieved when one speaker decided to give them a breather from those ubiquitous acronyms.

Oracle keynoter Brian Pawlus told the audience that he would instead focus on how next-generation business support systems (BSS) can help service providers achieve what he called "connected lifestyle monetization."

Pawlus, who is director of product marketing for Oracle Corp. (Nasdaq: ORCL), pointed out that despite ever-increasing connectivity of people and devices, service provider profit margins are decreasing -- due in large part to the erosion caused by over-the-top providers. To fight off the OTT threat, service providers have to make themselves more relevant in the minds of customers.

"We've done a very good job of understanding our customers," Pawlus said. "But who do they think of when they pick up the device? It's not the operator -- it's one of these over-the-top providers."

The key to connected-lifestyle monetization, he said, is moving from the mindset of selling a me-too product to a mindset of the buyer, and providing a portfolio of lifestyle services that customers can personalize and control.

"Customers are willing to pay more if we offer that kind of value -- personalization, control and relevance to what they're doing," he said.

Network operators should focus on product innovation via quality rather and price, real-time customer engagement, and increased profitability via operational efficiency, he said. Systems that help operators with functions such as charging, billing policy, and analytics -- to monitor churn and customer segmentation, for example -- will help operators get there. Pawlus even encouraged more cooperation with OTTs, such as exposing charging policy to OTTs and billing for them through the service provider's bill.

"Attract, retain, influence," Pawlus said. "These are tried and true business concepts."

— Jason Meyers, Utility Communications Editor, Light Reading

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User Rank: Light Beer
6/30/2014 | 11:45:39 AM
Re: Fightin' words
@nasimson it is a big amount indeed! They used the Veris O2P (read O-squared-P). The detailed case study is available here:
User Rank: Light Sabre
6/30/2014 | 11:09:08 AM
Re: Fightin' words
@ sha : USD 200 Million dollars a month is an impressive number for any telco. Can you please share some details of the arrangement? Which collaboration platform are you referring to?
User Rank: Light Beer
6/26/2014 | 5:35:07 AM
Re: Fightin' words
'Fighhting OTTs' is not the answer indeed! One example of partnerships between Operators and OTTs generating great benefits for operators is the world's 10th largest operator -  China Telecom. In 2011, this operator invested in a collaboration platform to converge its own products with OTTs, and to open up its IT systems for use by the OTTs. Result - China Telecom generates nearly $200 million a month from this initiative!
User Rank: Light Sabre
6/24/2014 | 7:16:35 PM
Service providers have geographic boundaries. Also they are very poor in developing interfaces that provide personalization, .. These limitations are hard to transcend and are the reason why OTTs became successful in the first place and to this day do not provide the same services at the same scale as service providers.
User Rank: Light Sabre
6/23/2014 | 12:56:15 PM
Re: Fightin' words
I agree with that. One way is to take advantage of virtualized network functions that allow for the delivery of Web-scale applications at a very low cost.

Tiscali's Indoona social networking app is one example of an over-the-top service that helps a telco extend its brand, reach and network beyond the borders of its traditional facilities-based business.
User Rank: Light Sabre
6/23/2014 | 11:45:19 AM
Re: Fightin' words
As much as they may want to see OTT as skimming the cream, in many cases these direct content providers are too fighting to stay relevent.   Look at how Netflix is moving into original programming and how YouTube has stuck ads in every 20 second cat video it could find.  

The service providers have succeeded mainly riding on the backs of the enourmous volume of free content generated by Web authors and creators.   Even Google itself would not exist if millions of people had not blogged and filmed the millions of hours of desirable content that exists on the Web.

User Rank: Light Sabre
6/23/2014 | 10:03:22 AM
Fightin' words
Network operators need to understand that "fighting" OTT competitors is not the answer -- and the message from the Oracle keynoter reinforces the idea that drawing battle lines is not a smart idea. Figuring out a profitable and sustainable model for OTT service delivery should now be the biggest priority for all network operator five-year plans.
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