The biggest threat for operators in trying to move into the over-the-top (OTT) space is venture capitalists, Matt Fischer, a vice president at Malaysian Wimax player YTL Communications warns.
Speaking in a panel session during the CommunicAsia conference in Singapore yesterday, Fischer said venture capital firms are much faster than telcos, and have more resources with which to play in the OTT sector.
"The rules are changing, and we [telcos] don't even know the rules. The [start-ups] don't have to make money, and the VCs have a portfolio of companies, so it's not an issue if some aren't profitable. So telcos can't compete is this space."
He said for an operator to compete against OTT players is like winning the cricket championship this year and saying you’re going to win the rugby championship next year.
Incumbents are at a disadvantage and have a fortress mentality, he adds. Unlike the internet players that make money when they bring traffic in, mobile operators are trying to minimize the traffic on their networks because it costs them money. Fischer argues that SMS is going to go away and it's just a matter of managing the decline.
The way forward is smart partnerships with the right brands that customers want to use. "The only real tie is brand association,” Fischer states.
He joked that operators’ strength is extracting revenue from customers and hopefully running a decent network. Operators, he believes, can play a key role in overcoming barriers to e-commerce as many customers in Asia are reluctant to use their credit cards online.