Telcos morphing into OTT predators
It is becoming increasingly apparent that the telecommunications industry, mobile operators in particular, have become paranoid about so-called over-the-top (OTT) players, and those very same OTT players have no idea why they are being labeled or singled out as a threat.
It would be fair to say, after meeting many of them in recent months, that they don't even recognize the term or the inference of evil often attached to it. These digital service providers (DSPs), as they should be referred to, are simply doing what they need to do - provide digital services and products to their customers. The fact that their delivery medium happens to be fixed and mobile internet service provider networks is not their concern, and why should it be?
It's difficult to find an analogy to describe the role of networks in the digital era that best explains how DSPs think, but let me try using cars and roads. Without roads cars would be useless. Governments and private corporations build roads that cars drive along. The roads are paid for by the collection of road tax, fuel taxes, tolls, etc - all paid by the car owners. There really is no such thing as a free road. In most countries, if you want to use the fastest route via motorways and super highways, you have to pay more for that privilege.
At no stage, and in no country to my knowledge, does the maker of the car directly pay anyone for the use of those roads - only the users of the roads do. DSPs see themselves as the carmakers of the digital era. Without networks their products and services would be as good as useless, but just like carmakers, they rely on others to build the networks (roads) and for their customers to pay for the privilege of using them.
Is that a fair analogy? Yes, of course it is. Can it be changed, i.e. charge the carmakers for their cars using the roads and the DSPs for their apps and content using any network? Of course not! It's too late for that.
Those toll collectors prefer to see more cars on their highways, and network operators should feel the same way. If the roads become congested, then widen them. If the traffic gets too slow, drivers find alternate routes. If they need to pay more to save time and petrol they do so for the "privilege".
Car owners are used to that, so why aren't network customers? Have they become spoilt by over-competitive network operators hoping to attract the largest number of customers? And how can the network operators even assume that the DSPs should, or would, pay for their services to be delivered over the networks?
Senior DSP speakers at events in Nice, San Jose, Kuala Lumpur and Singapore I have attended have all stressed they don't like being called OTT players, they don't see the network operators as the "enemy", and they certainly do not see their distribution and income stream as sacred territory that cannot be shared under any circumstances.
In fact, they have indicated the exact opposite and that they welcome advances from CSPs and see many areas of cooperation, including direct distribution, reselling, billing-on-behalf-of (BOBO), access to the vast prepaid markets and joint marketing. And they are not blowing smoke either - many deals have already been done.
They also see that CSPs are making strategic investments in many DSPs. A SingTel executive said his company had been approaching venture capitalists and equity funds asking about series B and C investments they could get involved in, presumably for investment, acquisition or early access to new digital products and services.
The realization that telco DNA does not lend itself to innovation in the digital sphere is the single biggest sign that times are changing. There is no rush to absorb the new players into the fold and crush their creativity with telco processes and risk mitigation. This brave new world is one of involvement from a distance, look and see, then pounce when the time is right.
And who wouldn't want to see this work out to the benefit of all?
This article first published in Telecom Asia December 2013 /January 2014