Cloud-enabled opportunities for telcos in the age of OTT

Sacha Gera/Ribbon Communications
29 Nov 2018

Asia Pacific (APAC) OTT players have grown tremendously in a few short years as this scalable and cost-effective technology has successfully infiltrated every aspect of our digital life today, acting as a powerful underlying engine for our social media, instant messaging, and even video streaming. The region’s aggressive investments in 5G infrastructure, coupled with its millennial generation who has grown up mobile first, will further fuel this wave of transformation in the way we communicate and collaborate. Is there space for both telcos and OTT players as the battle to capture consumers’ attention in APAC – the market with the highest volume of mobile data traffic worldwide – intensifies? One thing we know for certain: consumers are drawing away from traditional communications services despite the overall growth in communications activity. Telco players need to act fast before their business models become obsolete.

In terms of appealing to customer needs, OTT players are powering ahead with their ability to support an attractive class of communications solutions for large enterprises, such as OTT communications applications and content services delivered via cloud platforms. These companies are aggressively expanding their customer base by encouraging other companies to innovate using their pre-built, customizable engines. While communications service providers (CSPs) are in a unique position to own the next generation of real-time communications (RTC) delivered via software platforms, they have been slow to adopt technologies that are replacing their legacy services.

The good news is that CSPs stand a good chance of recapturing the Communications Platform-as-a-Service (CPaaS) market share from new entrants by tapping into existing platforms to expand their portfolio. The key is to act fast to ensure that new innovations that deliver enhanced reliability, scalability and security are rolled out in time to ride the current wave of customer demand. In 2017, Southeast Asia’s demand for cloud-based or hosted unified communications services is predicted to reach $98m by 2022 – up from just $60m in 2017. This represents a tremendous opportunity for CSPs to establish their lead in the regional market, and they already possess the IT resources to make it happen.

As CSPs bring more OTT applications into the network, it is also crucial for them to have the right back-end infrastructure in place – one that is capable of supporting ongoing expansions. Before embarking on their transformation process, CSPs need to carefully consider a CPaaS that most complements their existing business model while delivering new values to their embedded base.

Can cloud-based communications offerings benefit CSPs in the long run?

With traditional, transactional transport revenues under increasing price pressure, opting into a proven, pre-integrated set of CPaaS offering (including voice features such as call routing, text-to-speech, conference calls, messaging, multimedia messaging, enhancement of existing “phone numbers”, mobility services, security services and more) can lead to growth quickly, without heavy upfront capex.

New services can all be delivered by software via an application programming interface (API) – which is easier for service providers, easier for enterprises and more secure and sustainable than legacy solutions that require equipment, maintenance and complex systems and contracts. This can potentially boost the adoption rate of cloud-based UC offerings and IP voice across Asia, where many companies still heavily rely on on-premise UC solutions and traditional telephony.

While CSP challengers are experiencing significant growth in sales and margins, APIs allow CSPs to also tap that revenue without having to “reinvent the wheel.”

Furthermore, by leveraging APIs, CSPs’ enterprise customers can also benefit in the following ways:

  • CPaaS technology simplifies the integration and deployment of communications-enabling applications. Software makes it exponentially easier and more flexible to unlock innovation and creativity – for example, microservices that are suitable for certain divisions of an enterprise, but not required across the enterprise.
  • Data can be harnessed given the digital DNA of CPaaS. This data has huge value when collected on cloud-native communications platforms – successful companies are building stronger relationships with their customers by creating products, services and processes that blend what they know about those customers online as well as offline.
  • Compliant and reliable services that strengthen communication capabilities within enterprises. End-customers can reap the benefits of a modern communications infrastructure while feeling confident that applications comply with privacy regulations such as the Singapore Personal Data Protection Act and Australia Privacy Act.

It is evident that transformation is the only way forward for CSPs. To remain competitive and to build up their tolerance for the risk brought about by new industry entrants, CSPs need to rethink, redesign and roll out digital real-time communications services that are made better – and more secure – on carrier-grade network infrastructure. Regardless of their unique communication needs, at the end of the day, businesses and consumers alike will pay a premium for quality services that are securely delivered.

Sacha Gera is SVP of Cloud Products at Ribbon Communications

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