While OTT providers show up clearly as potential threats on
service provider's radars, they would be well-served by paying
close attention to potential competitive threats from "underneath"
their core asset, the network. So says STL Partners in its 32-page
STL foresees telecoms network operators "suffering from a
creeping loss of control and ownership" of network infrastructure
either due to deliberate actions, such as outsourcing, or through
actions on the part of external agents, such as government and
"Telcos are losing control, and in our view losing influence over
their core asset - the network. They are worrying so much about
competing with so-called OTT providers that they are missing the
threat from below," STL states in a summary of its Telco 2.0
Critically, they are losing out on opportunities to launch new
services to third-party providers, along with being cut off from
their core network assets. "Outsourcing networks to third-party
vendors, particularly when such a network is shared with other
operators is dangerous in these circumstances," the report authors
"Partners that today agree on the principles for network-sharing
may have very different strategic views and goals in two years'
time, especially given the unknown use-cases for new technologies
Given the above and the uncertainty of business models associated
with emerging mobile broadband networks as well as fixed digital
multimedia services, telecoms network operators should "retain as
many business model options as possible," according to STL.
According to STL's report:
- Increasingly valuable services will be provided by
third-parties, though operators can provide a few end-user services
themselves. They will, for example, continue to offer voice and
messaging services for the foreseeable future.
- Operators still have an opportunity to offer enabling services
to 'upstream' service providers such as personalization and
targeting (of marketing and services) via use of their customer
data, payments, identity and authentication and customer care.
- Even if operators fail (or choose not to pursue) options 1 and
2 above, the network must be 'smart' and all operators will pursue
at least a 'smart network' or 'Happy Pipe' strategy. This will
enable operators to achieve three things:
- To ensure that data is transported efficiently so that capital
and operating costs are minimized and the Internet and other
networks remain cheap methods of distribution.
- To improve user experience by matching the performance of the
network to the nature of the application or service being used - or
indeed vice versa, adapting the application to the actual
constraints of the network. 'Best efforts' is fine for asynchronous
communication, such as email or text, but unacceptable for
traditional voice telephony. A video call or streamed movie could
exploit guaranteed bandwidth if possible / available, or else they
could self-optimize to conditions of network congestion or poor
coverage, if well-understood. Other services have different
criteria - for example, real-time gaming demands ultra-low latency,
while corporate applications may demand the most secure and
reliable path through the network.
- To charge appropriately for access to and/or use of the
network. It is becoming increasingly clear that the Telco 1.0
business model - that of charging the end-user per minute or per
Megabyte - is under pressure as new business models for the
distribution of content and transportation of data are being
developed. Operators will need to be capable of charging different
players - end-users, service providers, third-parties (such as
advertisers) - on a real-time basis for provision of broadband and
maybe various types or tiers of quality of service (QoS). They may
also need to offer SLAs (service level agreements), monitor and
report actual "as-experienced" quality metrics or expose
information about network congestion and availability.