OTT: from threat to opportunity for telecom sector

Tuesday 23 February 2016 | 18:03 CET | Market Commentary
The role of internet providers in the telecom landscape is changing. Comments such as "they're using my pipes for free" (AT&T) are becoming less common, and calls from telcos for Google, Facebook et al. to contribute to the costs of network investment are fading. Instead, operators are partnering more and more with OTT providers. OTT is no longer a threat, but an opportunity. 

KPN is a good example of a telco that positions itself as open to the OTT sector; Spotify, Fon and Netflix are its partners for some time already. CEO Eelco Blok has changed his tune compared to 2011, when he also talked of Google and Facebook helping pay for network infrastructure. Telecom operators around the world have seen that cooperation gains them more than a cry in the dark for money. Google and Facebook already invest billions each year in infrastructure, and their growing array of services ensures that telecom operators enjoy continuous growth in demand for bandwidth and mobile data services. The shift to partnerships is well underway, as a recent selection of news shows:

  • Google is going to work with the GSMA on an Android RCS client. While the details of how this will work aren't yet clear, it appears interoperability is the aim, and that can never hurt in the fragmented communication market.
  • Google also partnered with Orange, which will act as a distributor of Google products in Africa and the Middle East. This appears similar to Facebook's Free Basics, but without the sponsored data element, something that Facebook has been forced to defend in the face of net neutrality objections.
  • Twitter has partnered with Liberty Global to integrate the messaging service in the cable operator's Horizon box. Customers will be able to follow a Twitter feed while viewing a programme, helping to share comments and recommendations.
  • Ericsson is launching the OTT Cloud Connect platform, with Google as its first partner. This will give OTT providers access to the OSS/BSS at telecom operators. Ericsson is also working with operators to connect their networks better to OTT providers over a content delivery network
  • Deutsche Telekom announced the new service Immmr. This virtualises the phone number, so it can be associated with any device and work independent of the Sim card. DT calls this a "managed OTT service".
  • HKBN, the Hong Kong Broadband Network, is partnering with TVB.com, so the broadband-only operator can offer its customers an OTT TV service. This takes it a step further than the Netflix integration at some operators, as HKBN does not offer triple-play services. This strengthens the business case for broadband-only operators in a market that demands service bundling in double, triple and quad plays.

Telcos and the OTT sector are burying the hatchet and realising telecom operators are the ideal distribution partner for OTT providers. This is leading to ever-deeper integration of their services. Telcos profit from higher customer satisfaction, greater demand for bandwidth and in some cases even a share of the revenue. In the end, OTT has moved from being a threat to becoming an opportunity for the telecom sector. 

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