How to make OTT and mobile play well together

editor's corner

"If you can't beat 'em, join 'em" is becoming the mantra for some mobile operators that are increasingly seeking ways to exploit the third-party services that use up their network resources without handing over any additional revenues.

Service providers worldwide are feeling the pain from over-the-top providers cannibalizing revenues from their traditional services, particularly when those third parties provide voice-over-IP services and IP-based text messaging. Of course, OTT video also has a gargantuan impact on mobile data traffic, with operators seeing little upside from customers' use of streaming videos aside from the sale of higher-tier data buckets.

But clever minds are pondering ways to build an ecosystem in which mobile networks and OTT providers can both prosper.

One way service providers could work with OTT providers might be to offer granular service packages to their customers, said Akil Chomoko, head of product marketing and commercialization at Volubill. The company provides policy and charging solutions to 80 service providers across the globe.

Chomoko told me that in developing countries, operators are enabling cash-constrained customers to sign up for specific service packages that enable them to get just the voice and data services they want without spending extra money for services they don't need. For example, a customer might buy a low-cost data package that provides access to email and most Internet sites but does not allow access to Facebook or Google's (NASDAQ:GOOG) YouTube.

Such granularity seems right at home in emerging markets such as Egypt and Madagascar, where people have never learned to expect unlimited access to mobile Internet services or other products and services, for that matter, said Chomoko. He noted that in India, people often buy shampoo in tiny bottles, which are much less expensive than larger bottles, and this line of thinking translates well to granular mobile data offerings.

Nonetheless, Chomoko contends that the granular approach could be applied in the developed world, where mobile operators could create special service packages that deliver a specific amount of access to popular OTT services such as Skype and YouTube. If consumers value such services highly enough, they may be willing to buy into specific data plans just to access them. "This level of innovation has been rife more in emerging markets," said Chomoko. "But now the developed nations are taking things forward."

However, granular charging for OTT services is more of a leap in developed nations because customers are used to unlimited fixed broadband services and may have even started out getting unlimited mobile broadband services. But as the latter quickly shift to tiered offerings, operators could give customers more control over their data plans by attaching prices to specific OTT services and letting users choose which ones they're willing to pay for.

Another approach to the OTT dilemma revolves around service quality. Hugh Bradlow, CTO at Australian mobile operator Telstra, told Mobile World Live that it's time for mobile operators to collaborate with OTT players and help better enable mobile delivery of their services, with the understanding that those OTT providers will pay for that additional value. He contends that as OTT players start seeing how their services can become degraded in a mobile environment, "they will start to realize that there is value in managing and operating a network effectively and being able to get the extra quality that they need [in order] to deliver their services."

Even in antagonistic situations where mobile operators and OTT players are butting heads, the former might still exploit the situation to their advantage. For example, reports that the Korean Communications Commission recently opted to let mobile operators charge subscribers for accessing mobile VoIP services provides by OTT players, such as local favorite Kakao Talk. Of course, the VoIP providers are not happy with the decision and neither are mobile customers.

But what is so wrong with letting mobile operators charge what the market will bear for access to OTT services? And why must it always be assumed that operators will assess punitive access fees for OTT services? They might not if doing so puts them at a competitive disadvantage vis-à-vis the competition.

In the case of Korea's VoIP decision, if the market-based system works as it's supposed to, a smart operator could seize the opportunity by charging less than rivals do for access to Kakao Talk. Thus, the operator could raise revenue from VoIP access charges, leverage the KCC's decision for competitive advantage and potentially make the VoIP providers and mobile customers happier than they are right now. In fact LGU+ has done just that, by letting its subscribers access  Kakao Talk for no additional charges.

The rapid emergence of OTT services means it's not business as usual for mobile service providers. But with some creative thinking, there must be loads of ways to make OTT and the mobile world complement one another. Not every proposal will work, but it's time to start trying some of them.--Tammy