Communications service providers (CSPs) are fighting back against the over-the-top (OTT) players and the strident consumer demand for increasingly low-cost data using the weapons available exclusively in their armory.
They are doing it by delivering exciting content on any device, offering surety of service quality, exploiting their charging expertise and flexibility, excelling at partner relationships, and putting control in the hands of the customer.
Analysys Mason predicts global IP traffic growth at 40% CAGR, while mobile data traffic will grow at 120% CAGR. At the same time, revenue is projected to grow at a much slower rate of only 16% CAGR. While the sheer numbers portray a disconnect between investment and reward, they overlook the potential value that customers derive from their data usage.
If a CSP delivers rich, premium content with necessary quality of service (QoS) and in a timely fashion, customers are willing to pay for it. The CSP has to compete with the OTT players on this front by making best use of its long history of technology and device expertise, ownership and control of the delivery network, unrivalled charging and settlement processes and skills, and knowing what it means to be close to the customer.
Customers demand everything now, wherever they are, on whatever device they happen to have at hand. A CSP that can form partnerships with sought-after video, gaming and music providers -- and deliver that content to any customer device -- is in a highly competitive position.
With a reliable content delivery network and the right content monetization and storefront strategy and systems, CSPs can exploit their technological skills to provide content on internet-connected TVs, smartphones, tablets and PCs. Videos can be started and stopped, then resumed on a different device. Games can be played in HD quality wherever the gamer happens to be.
But the highly competitive nature of the premium content industry means that CSPs need to draw upon all their strengths to compete with the OTT players. The key advantage a CSP has is its network. QoS may well be the next competitive frontier as consumers become increasingly demanding for network speed and QoS.
CSPs maintain a significant advantage in being able to control the bandwidth they offer to consumers, an advantage that is more readily exploited through today’s policy management solutions. A consumer is more likely to buy their content from a provider that can assure bandwidth while they watch a movie or play a game.
However, policy management alone is not sufficient. Online charging needs to be integrated with policy management so that the customers are charged for the value they are receiving. In this arena, the CSP can truly excel over his OTT competitor considering that flexible charging and billing has been a staple of the communications landscape for decades.
Bundling, “Friends and Family” plans, cap plans and the like have all been around for many years, but the newer OTT players are stuck with a one-size-fits-all approach. Imagine the scenario where a VIP customer is rewarded with premium content at a discounted rate because his service provider knows and appreciates his total spend on all other aspects of his account, or because he has been a loyal customer for a long time. That VIP customer would be more inclined to buy his content from his CSP, and would be more loyal to that CSP.
Other charging scenarios are also possible. New market segments can be reached by offering advertising-subsidized gaming and movie services to those who may not otherwise have the disposable income to enjoy them.
Integrated charging and policy management also enables the CSP to put its customers firmly in control of their own services. Within a traditional online store, the consumer can ‘shop till they drop’.
A CSP with integrated online charging and policy management can provide their consumers with budgeting options, or control over their children’s or employees’ spending. Not only does this provide the consumers with peace of mind, but increases the likelihood of spending more when they are not concerned about bill shock and feel in control of their spending.
As a CSP seeks to become a competitive player in the premium content delivery chain, the content must come from somewhere. On the supply side of the value chain, CSPs need to build relationships with the studios, game factories and aggregators that offer the most desired content.
Again, CSPs can have an advantage by providing partners with flexibility that the OTT players typically cannot or will not offer. In the same way that online charging solutions can offer innovative, flexible pricing to entice and retain consumers, so partner relationship management solutions can offer incentives to content partners such as increased revenue share for a period of exclusivity, minimum payment guarantees, subscriptions and ad-supported models. The OTT players are finally waking up to the importance of partner relationship management, but for now the CSPs have an advantage.
CSPs have all the tools at their disposal not only to compete with the OTT players but to beat them at their own game. CSP systems, processes and business models already exist and can be extended to deliver premium content on any device whenever the customer wants, with assured QoS.
CSPs must exploit their charging expertise and flexibility by combining online charging with policy management to offer innovative pricing and budgetary control. They should provide the content that consumers demand by forging strong relationships with the content providers through innovative settlement and offerings.
Siobhan Ryley is head of cross portfolio strategy at CSG International