The OTT wars — how will the telecom industry fight back?
August 17, 2011 - Openet
In the midst of the 'battle for net neutrality' and the pincer movement of Netflix, YouTube and Google, the telcos need to go back to the drawing board. Or so believes Mike Manzo, marketing director with Openet, who talked with Connected Planet about the future of over-the-top.
Connected Planet: What will happen in the apparent fight between telcos and over the top players? Is that a fair question?
Mike Manzo: I am not sure I can tell you what will happen, I don’t have my crystal ball with me, but I can certainly tell you what did happen and what should happen.
Connected Planet: So, can we start with what did happen?
Manzo: Telcos need to have a second look at their business model. Tellabs has predicted that wireless telcos will no longer be making a profit by 2013. What happened was that telcos gave content away for free, and once you have done that it is very difficult to start charging. This meant that customers valued the content but not the delivery of it.
As we enter a world of overage charges, customers will change their watching habits. They will stop watching Netflix if it becomes too expensive. What could happen is that telcos could monetize quality of service. For instance, there could be a Netflix bundle for $20 that incorporated a quality of service element. Maybe one subscription to Netflix and one to the telco.
Connected Planet: Will analytics have an impact on either network management or customer management or is that something that telcos have not grasped yet?
Manzo: It will have a great impact, if it is used properly. Actually, I have been selling mediation as an analytics tool for three years now. If a telco can become a smart pipe and enable a great customer experience then that is important and a good step towards personalization.
Connected Planet: Will it work?
Manzo: It could but there will need to be a cultural shift – at the moment, telcos are, shall we say, not great at customer experience. They will need to change their DNA. They need to get to a point where they are testing and trying new models all the time – trying concepts that may fail. They need to be agile in infrastructure and culture.
We did a piece of work recently, with a couple of partners, in the TV world. Nielsen only measures the top 50 channels and we made it possible to get data for the ‘long tail’ of the bottom 350 channels. This fed all the way through to the sales and negotiating teams – for advertising sales and for content negotiations.
In most cases where you are looking at the network side of the business, you must be pro-active. It is simply not good enough to have anything except pro-active congestion management on a network. If you are reactive, the customer is already upset by the time you get to see the problem.
Business intelligence and analytics are in their infancy in telecom. Again, it is about a change of culture. How can you build a business case or work out the ROI for innovation and speed? It is definitely difficult.
You should have the culture that says: what are the top five services I can launch with a next generation architecture? You also have to think outside the box – we had a customer who was looking at the tethering issue a year ago and we came across the same thing. Their reaction to tethering was to stop it, and we persuaded them to create a pricing plan around tethering.
Connected Planet: So the culture needs to change?
Manzo: We need an agile culture and agile infrastructure, ways to reduce churn and create new revenue streams. That may take some time!