Analyst Angle: What operators can bring to OTT partnerships, besides billing

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Hardly a day goes by without an announcement of a new partnership between an operator and an over-the-top provider. OTT partnering has become a key strategic initiative, or rather a necessity, for telecom operators looking to provide relevant services to digital consumers. Partnerships are formed across the whole OTT universe – all the way from voice and messaging services, to video and personal cloud services. While carrier billing is the main lure for most OTTs still lacking viable and future-proof business models to start talks with operators, there are many other key assets that operators can offer to enrich services.
Depending on what part of the OTT universe operators decide to approach, operators can leverage different capabilities. Mobile identification, security and big data analytics are some of the operator assets that can add value to the OTT-operator service package. What these assets have in common is that they leverage the cloud to enrich the digital experience and open to further monetization.
As explained by Marco Talmon, CEO of Viber, OTTs are prepared to share revenues when they charge users because they need someone to process the billing. Carrier billing has been at the core of the many initiatives that have seen WhatsApp partnering with telecom operators. These include the WhatsApp roaming packs offered by Three in Hong Kong, Vimpelcom’s new WhatsApp bundles in Pakistan and Bangladesh, and most lately the WhatsApp zero-rated prepaid SIM debuted by EPlus in Germany, which bundles unlimited usage of the messaging app with voice and data. These relationships are already bringing to both parties business benefits that are not limited to increasing revenue, but extend to customer loyalty and brand enhancement.
Mobile identification – the capability of enabling access across different devices, networks and services – is becoming more important to mobile operators as OTT voice and messaging apps move into the cloud. In the United Kingdom, Telefonica’s O2 is using mobile ID to make its own OTT voice and messaging app TuGo available on any device, from laptops to tablets and over Wi-Fi, just like other communications services such as social networking and e-mail. The next step would be to exploit mobile ID to add value to OTT-operator partnerships, for example with the likes of WhatsApp. Mobile identification offers a broad range of applications. Its growing importance is shown by the formal support it has gained by the GSMA as well as by many operators, content providers and vendors.
Security is another key operator asset in a cloud-based OTT partnership, especially for the many operators keen to become providers of business and personal cloud services with the goal to increase customer loyalty, up-sell and bundle services. In Italy, Telecom Italia is set to extend its partnership with Amazon.com from mobile apps, Amazon Mobile and Kindle for Android apps and to Amazon Web Services for cloud computing. In an OTT/operator partnership for personal or business cloud services, the operator benefits from the agility and quick time-to-market of the OTT, while the OTT gains from the security aspects that operators uphold: localized data centers, customer care and proximity to the client. Security is becoming even more important as enterprise mobility increase and as more companies embrace “bring-your-own-device” models. Consumers are also becoming more sensitive as consciousness of data security and privacy of communication is increasing.
Alongside mobile identification and security, operators can bring to the table their relationship and knowledge of the customer as natural big data companies. Big data analytics, as the potential to create a unified view of a customer, is the other key operator asset capable to eventually take the OTT-operator partnership to the next level. Telecom operators have some critical pieces of data that OTT players do not have, such as customer data, location data, call records, weblogs, traffic and a variety of data from fixed and mobile end-user devices, such as handsets and set-top boxes. It is still early days for big data, and both OTTs and operators are likely to be very careful about making their data sets available in partnerships. Nonetheless, the potential to join forces to develop a holistic view of the customer and their preference is huge.
Operators and OTTs have complementary assets, but their competitive instincts often prevail. The absence of OTTs at most telecoms events where partnership models are scrutinized, witnesses a certain incommutability that persists between the two worlds. Nonetheless, behind closed doors the communication channel is open. There is a great deal of experimentation to find ways to leverage both assets and benefit all parties. If operators can sell to OTTs their key capabilities, then they will be able to cooperate in a stronger position. At stake is the opportunity to remain relevant by providing rich communication services to digital consumers and enterprises.
Daniele Tricarico is a senior analyst in Pyramid’s strategy and innovation practice and the lead analyst for over-the-top services. His areas of focus are the convergence of media and broadband, and operator strategies and business models for digital services and applications. He brings to the role extensive experience in emerging markets, having covered as an analyst the Latin America telecom industry for four years. Tricarico holds an MSc in new media and information systems from the London School of Economics and an MA from the University of Bologna.