Home / ANALYSIS / Telco-OTT innovation

Telco-OTT innovation

by Digital Studio Middle East Staff on Jun 14, 2017

The OTT communications model is gradually moving towards a revenue generation model for both telcos and OTT players.
The OTT communications model is gradually moving towards a revenue generation model for both telcos and OTT players.

DB: An ideal world would mean not having to subscribe to multiple services, and getting an amazing experience irrespective of the device and the geographical region we are in, and according to our tastes. How far have we made the progress towards that yet?

Bartosch: If one considers subscribers in a country like Finland with a flat rate data plan who have a Netflix subscription, then these customers are relatively close to an ideal state. On top, many operators offer direct charging of Google Playstore content, which could be extended to a one-stop shop for Android device users.  However, as Apple has shown, owning of customer billing relationship is also key for OTT players. Telcos will therefore have a hard time becoming the one-stop-shop, the risk rather is that Google will become a global mobile virtual network operator (MVNO) with soft SIMs and hence able to disintermediate telcos.

Haysom: On the ability to consume content on-the-go across the UAE, we have that covered. Outside the UAE however this is still challenging. The studios and rights holders execute different deals across regions and to navigate that and cut deals to ensure a consistent product can be challenging. For carriers with good subscriber reach in other parts of the world it makes the job a little easier; just looking at the top global OTT providers for example, their experience and catalogue varies widely depending on the country.

Hammoud: This is a very nice description of an ideal world where both telcos and the OTT players would love to see it happening. However, it requires not only the willingness from Telcos or OTT players but also the full-fledged compliance with state related external factors like regulatory environment and tax regimes that vary across the countries. Unfortunately, it is very early to say that we made a significant progress on this so far.

Tibi: Customers will always have the need to subscribe to multiple services since OTT players will offer exclusive and original content to differentiate them within a competitive streaming TV market.

DB: The experience and expertise of OTT and the infrastructure of telcos can merge to create excellence in media delivery- what’s hindering it so far then?

Bartosch: In mobile networks, one of the hindrances is the technical architecture of existing mobile networks with tunnelling between packet core and device. Another issue is the competition for the customers’ awareness and interest, where OTT and telcos are increasingly fighting for the advertising revenue.

Haysom: Even beyond our fibre reach we are investing in a dedicated “Fixed LTE” network to ensure even those in the remotest areas in the UAE have access to quality broadband. We take pride in our service delivery and are proactively monitoring down to the OTT streaming service level to ensure delivery is as good as it can be. Etisalat invests in content delivery networks (CDNs) as well as large caching infrastructure to bring the content as close to the subscriber as possible to boost performance. Excellence in media delivery is progressive and we already employ a proactive mind-set for our subscribers across the UAE.

Hammoud: Nothing. This is indeed what we have done in Zain by establishing the JV company with iflix to bring the most innovative VOD platform in the Middle East. In my opinion, telecom operators consider digital verticals beyond standard partnership models where the value is quite minimal. The strategic question for the telecom operators should be “how can we increase our existing in a specific digital vertical value chain through utilisation of my existing assets and capabilities?” This will help the telecom players to think differently and will fasten the pace of transforming them from traditional telco to complete digital services provider.

Tibi: Every operator in the region is different, with different environments, complexities, expectations and ambitions. Operators want to offer diversified products and services but are sometimes reluctant to collaborate with OTT players and third parties.

Sheikh: The industry is still in its infancy. Two years ago, there was a lot of scepticism in the market that OTT wouldn’t be successful. Now, you see players like StarzPlay and Netflix that are doing extremely well in the region. So, you just have to give it another two or three years before the industry starts to develop. If you look at the traditional broadcast pay TV industry, it’s 25-30 years old. If you look at the OTT lifecycle, you are in year two, so from our point of view, it has been very successful. We have certainly expedited our subscriber growth projections. But I think it’s going to take another year or two before it becomes a mass product.


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