Bangkok--6 Nov--Weber Shandwick
BLOG 1 — Do Communications Service Providers and Over—the-Top Providers Need Each Other? Yes!
The move of applications such as Facebook and Skype into mobile devices, powered by advanced mobile operating systems, has by now completely transformed how we communicate, manage our daily affairs, work and recreate. There are millions of Over-The-Top (OTT) applications and services that many of us use very frequently and simultaneously, on a growing variety of connected devices. These range from smartphones to tablets, to laptops to smart televisions, to cars and new devices such as connected cameras. This widespread on-going use of apps and services poses many challenges for both the communication service providers and the OTT providers.
Being left out of their own party
As more and more data is consumed, Communication Service Providers (CSP)are increasingly faced with the problem of data service commoditization. We are accustomed to being connected everywhere, and all of the time, many of us with unlimited “all you can eat” data plans. And as we take data connectivity for granted, the average revenue per user for data services is quickly decreasing. And soCSPs are faced with a serious challenge of introducing value back into data plans.
This problem is further aggravated by the increasing use of OTT applications and services. As data consumption rises due to use of OTT apps and services, there is a need to deploy more advanced, higher speed, network equipment. This is a very costly task for CSPs, as they are required to spend billions on deploying next generation networks (e.g. LTE) to support the growing demand for data. But they don’t necessarily see any added return on this investment from the OTT providers that drive much of the traffic. And it gets even worse for CSPs, because every time users use IP messaging apps such as Whatsapp, they are not using SMS. And every time they are using IP calling apps such as Skype or Viber, they are not making regular voice calls. And this has a negative impact on revenues from legacy services such as SMS and voice.
And so it is clear that CSPs are facing an urgent need to reconsider their data strategies, and find a way to get into the OTT game.
It’s cold in the OTT world
In the industry there is a perception that life is good for OTT app providers. A large variety of smart connected devices are at the user’s disposal all the time, and the OTT services can be very easily consumed (and paid for) anytime. But the reality is that OTT providers face some considerable challenges of their own.First, Quality of Service (QoS)gradually becomes a serious problem for OTT providers. As users consume more data, the networks become increasingly congested. This congestion often negatively impacts the application or service user experience. E.g. did you ever try to watch an online video clip in HDquality on your mobile device during rush hour?
OTT providers also face tremendous competition. Between the Android and iOS ecosystems, there are millions of applications and services to choose from, in virtually any imaginable genre: From communication to media and recreation, enterprise, gaming and many other areas of connected living. And thus OTT providers are often looking for an edge, or a special feature/benefit that can distinguish them from many other competitors playing in the field.
This need to compete smartly becomes an even bigger problem for OTT providers when customer loyalty is considered. As there are so many apps and services to choose from (many of which are provided free of charge), and as there is always something new to catch their attention, users can be quick to dispose of OTT services, replacing them with new ones. Think of the number of applications you install and remove from your smartphone in the course of one year, and you will get a sense of the customer loyalty issues OTT providers can be forced to deal with.
And so it is clear that OTT providers are facing an urgent need to differentiate their services so that they can better stand out in an extremely competitive environment.
CSPs have substantial network assets that if leveraged properly can be utilized to provide tangible value to OTT providers and the end users of OTT services and applications. These network assets, if applied properly in partnership, offer value not only to the OTT provider but also and enhanced user experience to the end user of the application or service:
- Quality of Service (QoS) —Different OTT providers can struggle with different QoS issues when the networks are congested. For example, streaming media applications might encounter bandwidth issues, gaming applications might suffer from latency and applications that rely on a high quality or dependable connection (e.g. enterprise or shoppingapps) might suffer from lack of priority as well as bandwidth. The CSP can provide enhanced QoS to a particular OTT provider’s data sessions, through a partnership, in exchange for some of the revenues. This could be bandwidth, reduced latency or priority, or any combination of them, which could allow the OTT provider to offer a QoS far better than that of the competitor’s and gain more users or charge a premium.
- Subscriber base — The CSP can expose any chosen OTT service to millions (tens or in some cases even hundreds of millions) of network subscribers via joint offering partnership. This can translate into tremendous exposure opportunities for the OTT provider by means of resale opportunities.
- Payment pipeline — Communication service providers already have highly robust charging and billing capabilities that could be exposed to OTT providers, 3rd parties and developers in order to provide for “plug and play” charging capabilities for OTT applications and services. Charging and billing through the CSP’s payment pipeline represents an easy, secure and intuitive payment channel that can quickly and easily free the OTT provider from having to deal with elaborate payment and collection setups.
It is time to collaborate
Collaboration is a somewhat new notion in the industry, as CSPs and OTT providers still, for the most part, view each other as competitors. But the reality is that working together can allow both to succeed. Together. Partnering with OTT providers can allow CSPs to battle data commoditization by introducing value into their data plans. E.g. no longer selling MBs and GBs, but marketing data plans around the services users use them for. And partnering with CSPs can allow OTT providers to battle competition by differentiating their services from those of other OTT providers.
BLOG 2 — So if CSPs and OTT providers need each other — how exactly can they collaborate?Three examples.
So how is collaboration between CSPs and OTT providers kick started? It requires a change in the traditional perception of how CSPs and OTT providers should interact. In the past, and today still, many CSPs and OTT providers viewed each other as competitors. This resulted in the service silos we have today, in which both CSPs and OTT providers each provide services to their respective subscribers in a completely separated manner. There is a common denominator between these subscriber bases (e.g. a large percentage of smartphone owners are also WhatsApp, Facbook and Youtube app users). However this common denominator is still often ignored.
User-focused service synergies
There is more than one way to provide services. When the shared subscriber base and user experience are considered, there are various other ways in which CSPs and OTT providers can engage to provide services. There are also many ways in which CSPs and OTT providers can cooperate to expose their services together to wider audiences. Let’s have a look at some of these engagement types:
Enhanced Quality of Service (QoS)
In this collaboration model, enhanced QoS is offered to the OTT provider’s subscribers that are also the CSP’s subscribers. Enhanced QoS can be something different for every OTT application or service: Increased bandwidth for streaming media sessions, optimized latency for online gaming applications, priority for online shopping or enterprise applications etc. Enhanced QoS can be a strong differentiator for OTT providers and away to attract more customers and generate service premiums. These premiums do not necessarily have to be carried by the service end users. “Zero rating” (offering a particular data service for free) costs could also be carried by 3rd party advertisers and promoters as part of a tiered partner agreement.
A recent deal struck by Sony and Virgin Media in the UK is a good example of potential QoS leveraging. In preparation for the release of the much anticipated Sony Playstation 4, Sony is working to secure gamer grade connectivity for the future platform users. Latency optimization is likely to be required for the next generation of rich online gaming and both Sony and Verizon stand to gain from this partnership.Playstation users will likely be offered platform optimized broadband connectivity, and Virgin will ride the PS4 launch hype and leverage it to sign on more premium customers.
Citation: http://www.techradar.com/news/gaming/consoles/virgin-media-to-be-ps4-s-broadband-partner-may-offer-gamer-specific-deals-1174502
Latency optimization for gamers in the UK is not a new concept.Plusnet in the UK are a good example of how understanding application usage can lead to substantial growth. Gamer latency optimization packages offered by Plusnet to UK users in the past couple of years has helped to drive their gaming traffic up by 50% in 2013.
Citation: http://www.choose.net/media/guide/news/plusnet-gaming-boost-unlimited-fibre.html
Service resale
In this model, the CSP’s subscriber base is leveraged by the OTT provider to offer an app or service to the CSP’s subscribers. The OTT service is marketed by the CSP to subscribers as part of a joint offer. Such offers might also include enhanced QoS incentives for the particular service bundle. For example: A music streaming OTT service could be marketed to the CSP’s subscribers, with guaranteed bandwidth for a premium quality listening experience as part of the offer. The benefit to the OTT provider comes from the exposure of the OTT service to many new subscribers. The benefit for the CSP is the de-commoditization of data service by means of value-based offering (marketing an experience and not just a connectivity service).
Spotify music streaming service is an excellent example of an OTT provider who is set on actively leveraging the huge subscriber base of European CSPs to aggressively market their premium music streaming services. Recent agreements signed with KPN in the Netherlands and with Vodafone UK, support Spotify’s global expansion strategy. Reselling Spotify music services in various package structures, enables the service provider to reduce churn by being more than just a “dumb pipe” for data services, and it enables Spotify to expand and win more paying customers.
(Citation: http://news.cnet.com/8301-1035_3-57609058-94/spotify-to-carriers-we-dont-need-to-be-enemies/)
Carrier billing
In this model, the CSP’s payment infrastructure is leveraged by the OTT provider to collect payment for OTT services. The CSP can expose payment collection capabilities to the OTT and any other 3rd party developers, which enables “plug and play” charging and billing capabilities via the CSPsubscriber’s phone bill. This added payment flexibility makes collecting payment for OTT services much easier and more secure. It also frees the OTT providers from having to create payment channels of their own.Payments can be collected on a recurring basis or on an ad-hoc basis, or both, from within the OTT provider’s application and at any time. In exchange, some of the revenues are shared.
Carrier billing and in-app purchases have been growing more popular all over the world in recent years. Allowing developers and 3rd parties to integrate mobile billing capabilities via APIs creates a new and secure payment method for app users and perhaps one of the best examples is Facebook which is now partnered with carriers in more than 60 countries worldwide for carrier billing applicable for all Facebook applications.
Citation: https://www.facebook.com/help/236672983110999
More and more carriers worldwide have been adding carrier billing options for digital apps and content. VimpelCom Russia and SingTel (Singapore) have recently introduced new carrier billing options for Google’s Android store apps and content. Other operators, such as Telefonica Spain have been teaming with 3rd parties to enable API based carrier billing functionality.
Citation and more examples: http://www.telecoms.com/tag/carrier-billing/
Citation: http://info.singtel.com/node/12987
BLOG 3 — Collaboration with OTT providers doesn’t come without challenges — its four this time.
The road to collaboration
Leveraging CSP assets, such as QoS and subscriber base, to provide tangible value to OTT providers doesn’t come without challenges. OTT providers are very unique and differ greatly from other partners the CSP is typically regularly engaged with (e.g. interconnect, dealers, MVNOs etc.). The world of OTT services and applications is a highly diverse and dynamic one, and the methodologies and systems required to succeed in it must be equally flexible and dynamic. The following are “the 4 O’s”, or the 4 challenges of OTT partner enablement:
Onboarding
When it comes to setting up OTT partnerships, it’s about numbers and speed. There are millions of OTT apps and services, and they exist in a very high paced world and the challenge is to remain ahead and be ready to respond to the next big trend or app that emerges.Today, partnerships with OTT providers are sometimes difficult to set up support and months are needed to integrate all the network and IT systems to realize them. In order to enable OTT partnerships, CSP providers need to be ready to collaborate quickly and set up partnerships quickly. When there are companies such as Instagram that go from concept to millions of users in a matter of months, or gaming apps and communication services that go viral very quickly, it is important to be able to respond accordingly so as not to be left behind. The ability to support a large number of partnerships simultaneously, eventually even in the hundreds, is also key. As there are so many OTT apps and services to consider, a CSP’s OTT partnership portfolio might eventually be required to support a large number of partnerships.
Outfitting
Every OTT app or service is different in terms offunctionality and size, and thus the collaboration with each OTT provider must be tailored accordingly. A flexible system is needed to allow partnerships to be tailored for each partner on three levels: The first isQoS, as we have seen in the previous chapter — Every OTT partner has a different definition of QoS (e.g. bandwidth for Netflix, latency optimization for online gaming etc.). 2. Partnership type —There can be various partnership and customer ownership models. These can include resale models, preferred QoS, payment pipeline partnership or any custom combination of the 3 with or without 3rd parties in a tiered partnership structure.For instance a CSP and OTT partnership might require a tiered structure should a third party advertiser or developer be involved (e.g. sponsored zero rating data sessions). 3. Settlement — As the nature of the business engagement can be very different from partner to partner, a flexible settlement system is needed to support various revenue sharing models, incentives and tracking of the partner activities in real time.
Operation
Once the partnerships are set up and running, there is a need for management tools to allow the CSP to evaluate and control the performance of the OTT partnership portfolio over time. Managing daily operations with hundreds of partners is not simple and must entail real-time tracking capabilities for partnership lifecycle management and interaction with the partners (e.g. dispute management, reporting etc.)
Optimization
A large portfolio of partnerships requires powerful analytical capabilities for maximized profitability. Both micro and macro analysis capabilities are needed in order to assess the performance of partnerships to see how, when and where they are carried out and optimize the return on data service collaborations.
BLOG 4 —So let’s assume CSPs and OTT providers are engaged and wed, what’s in it for us, the end users?
Creating premium value
Once key network assets are harnessed, and OTT portfolio management capabilities acquired, the CSP has a powerful and highly customizable arsenal of service differentiating features to offer to OTT providers. This can include bandwidth, latency and priority optimization, access to subscriber base and subscriber usage patterns, device customization, exposure of payment, location and session based policy controlfunctionality, zero rated data sessions for promotion purposes, or any combination of them.
Let’s take a look at some examples.
A good example of zero rated promotional data sessions is Google’s “Free Zone” partnership with Airtel in India and other countries. In this partnership limited sponsored data sessions are offered free to users without data packages, allowing them to have a mobile data experience. Searching Google servers and linking to the first page of any of the resulting websites is free, while progressing further triggers an offer for a data service. This partnership allows Airtel to expose many new users to data services for the first time, with the potential to convert many of them into paying data service subscribers. The partnership also enables Google to expand the audiences it can ultimately expose to sponsored ads.
Citation:http://online.wsj.com/news/articles/SB10001424127887324328204578569034286356700
Multimedia streaming apps
As networks become more congested, multimedia apps such as video and music content streaming services can experience QoS issues. By ensuring bandwidth for the OTT provider’s app sessions, HD quality content can be delivered to the users hiccup-free. Device optimization can ensure that the QoS provided for the data session is optimized for the particular screen size of the user’s devices (e.g. HD quality for a tablet, and perhaps standard quality for a smartphone device). This service can be provided for a premium that can be shared between the CSP and OTT provider. Or alternatively, the enhanced QoS can be provided to the end users for free, if there is a promoter or advertiser that is willing to sponsor the data session (zero rating) in a tiered partnership structure.
Enterprise apps
Connecting people effectively is key to success in the modern digital work environment. Enterprise apps and services that facilitate global communication and collaboration rely greatly on efficient and dependable connections. Ensuring priority and bandwidth for OTT enterprise app sessions, means enterprise apps can always be connected in high quality for conferencing, sharing and collaborating. Bridging between the CSP and OTT user databases means premium app users can be identified easily and given preferred QoS. Here too device optimization can come into play, allowing for the connection to be optimized for the equipment being utilized by the end user.Zero rating for enterprise sessions can also be used to separate the end user’s work connectivity data session expenses (billed to enterprise body) from personal connectivity expenses.
Mobile shopping
Shopping apps and services have completely transformed how many of us shop. A contextualized personalized shopping experience is what it’s all about, and mobile shopping apps and services have proliferated greatly over the past few years. Ensuring priority for mobile shopping app sessions means connectivity or network congestion is never a cause for lost purchasing transactions. Access to subscriber database demographics and spending patterns means the shopping experience can be highly personalized and customized. Network location exposure can allow shopping apps to understand where consumers are, even when indoors, and promote accordingly to further enhance the contextual shopping experience. And finally, zero rating capabilities can introduce countless different promotion and sponsorship engagements into the mix.
Unleash business creativity
Battling the inevitable commoditization of data will depend greatly on the CSP’s ability to introduce value based offerings to customers (premium apps, content and services vs. just MBs and GBs), as well as on the ability to generate new revenue sources. OTT partnerships can contribute greatly to both these abilities.
A strong portfolio of OTT partnerships can be more than justa means of de-commoditizing data and increasing profitability. It can also be a catalyst for unleashing business creativity. With many OTT collaborations and a large portfolio of partnerships, the CSP can mix and match to create customized service and app bundles. Flexible network asset leveraging together with advanced partner management capabilities means the possible collaboration models are limited only to the imagination.
Amdocs OTT Monetization Solution delivers a powerful partnership-enabling platform that places the service provider at the center of the OTT services arena. It enables CSPs to leverage their existing assets to allow OTT providers to create premium differentiated user experiences for their end users.
For more information, please visit: http://www.amdocs.com/Products/Revenue-Management/Partner-Management/Pages/OTT-monetization-solution.aspx