OTT Providers, Operators See Writing on the Wall

March 5, 2012 - Openet

By Gary Rieschick

My esteemed colleague at Openet, CMO Mike Manzo, was part of a session at Mobile World Congress 2012 with 10 participants, including representatives from Facebook, Expedia, AT&T, Teliasonera, Telus, Etisalat and Telco 2.0/STL Partners. The clear message from both sides of this OTT/operator business model: There are services that operators can provide to the OTT community that the providers will pay for.

Despite the general consensus on the panel, the show floor was relatively quiet regarding enabling technologies for these sorts of partnerships. As Disruptive Analysis analyst Dean Bubley noted in his piece from earlier in the show, many companies have produced this type of software, but don’t typically publicize it as part of their suite of offerings. Look for this to change as projects here become more imperative to operators’ bottom lines. Tellingly, earlier this month Ovum said that 7 percent of total revenue was eroded by OTT services. This underscores a hard fact for operators that they have been dealing with for some time now: Profitability is dying, even for data.

What has become evident is the need for operators to think of new business models, not one-dimensional plans based on innovation for the sake of neutralizing competitors and maximizing profits, but two-sided business models between operators and OTT providers, that enable opportunities for differentiation through collaboration. An operator out of Europe told us prior to the show: “Ninety-five percent of our relationships with third-party companies, even big ones, are purely transactional and non-strategic. They won’t be aware of what more we could do for them. We need to build deeper relationships as a priority." Yet, as an earlier post on this blog noted, at least publicly at MWC, this mentality is still in its infancy at many of the leading operators.

Make no mistake about it – creating these types of collaborative economies will not be easy. However, things are moving in the right direction. As compared to several years ago, both sides recognize the necessity of these types of partnerships in creating not just long-term profitability, but a better way to serve their subscribers and customers.

**Editor's Note: What's Hot at Mobile World Congress 2012? Click here for a wrap-up of event news, blogs, a live Twitter feed and more. For an insider's take on some of the hottest topics at MWC, click here for a series of blogs from industry leaders reporting live from the event.**

Gary Rieschick is director of wireless & broadband aolutions for Openet, and is responsible for Openet’s strategies for product-enabled solutions. He frequently blogs at on network software and mobile strategy.


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