The third wave of telco-OTT partnerships

Neha Dharia/Ovum
23 Jun 2014
00:00
News
Commentary

The mobile operator-OTT dynamic has seen several transformations over the past few years. While the rise of OTT led to a lot friction between the two factions, the first wave of OTT-mobile operator partnerships saw tier 2 operators in the market tying up with OTT players to grow market share. However, the partnerships were mostly in the form of creative tariffs or bundling of OTT services within data plans.

The second wave in 2013 saw all types of operators from around the world partnering with social messaging players in various ways beyond bundling. For instance, 3 Hong Kong partnered with WhatsApp by way of a paid-for roaming pass for its subscribers, offering consumers subscription - based discounted roaming facilities. Then there were OTT-led initiatives such as Facebook Messenger partnering with 18 operators globally to offer Messenger for free or at low rates to their subscribers.

This was a fast and quick way to retain an operator’s media and OTT communication footprint as well as gain a bit of revenue. However, it does adversely impact SMS revenue and accelerates the consumers transition from operator-based communications services to OTT ones.

The time is now right for the third wave in mobile operator-OTT relationship. The partnerships need to go well beyond the bundling route and work together to create valuable services for the consumer.

Making OTT work

Mobile operators are feeling the squeeze as revenue growth slows and are under tremendous pressure to monetize their service and make good on their network investments. Adding to this is the growing migration of users from revenue generating operator services like SMS to free OTT services such as VoIP and social messaging. All of this makes it imperative for operators to leverage their core strengths and drive the third wave of OTT-telco partnerships, which can lead to powerful services that can be monetized.

The E-Plus and WhatsApp SIM card in Germany or the WeChat SIM by China Unicom give us a hint as to what the third wave of partnerships will look like. Operators have four quintessential strengths that can be invaluable to OTT players and also put operators in a strong position within the partnerships. Operators should leverage these strengths by:

  • Preserving and growing customer relationship and call center network that most OTT players do not have.
  • Leveraging the trust built through the billing cycle and expanding to payments, become the sole service provider for all of the consumers’ purchases and payments.
  • Using calling and location data to create more relevant services along with OTT players.
  • Strengthening the role of the unique identification mobile number as an established and robust communications network, enabling universal global connections.

If operators are able to capitalize on these four pillars of strengths along with being careful with the size and nature of the OTT player they partner with, then they will be in a strong position to drive OTT partnerships and will be able to leverage the popularity of OTT to grow revenue for telcos.

Neha Dharia is the senior analyst for consumer telecoms at Ovum in Asia Pacific. For more info please contact [email protected]

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