The world of communication, dominated by the large telecom carriers and network gear makers, has now been replaced by the nimbler, Over The Top (OTT) players such as WhatsApp. Innovation in OTT services have, in general, brought in much consumer surplus with imaginative services being offered at near zero prices.
This has also generated a debate on net neutrality and similar issues not only between telecom carriers and OTT service providers, but also amongst the larger public.
While the non-facility based, relatively unregulated, global OTT services with no geographical constraints ride over the facility-based, geographically constrained, regulated telecom carriers’ networks, it is time to think about synergies to provide innovative product and service offerings.Synergies in service
First is Smart Data Pricing, an economic approach to pricing bandwidth and managing network congestion. Time-dependent pricing and location-based pricing provide a unique opportunity for telcos to monetise bandwidth pipes more intelligently while managing network congestion effectively to provide quality of experience to users.
While the US carriers were stuck with a flat rate pricing scheme in voice telephony, Indian operators invented “sachet pricing”, unheard of in other parts of the world. Today, mobile data pricing can be much richer and hence rewarding for the carriers if implemented properly.
Second is mobile identification — enabling access across devices, networks and services, which is becoming more important to mobile operators as OTT apps move into the cloud.
In the UK, O2 uses 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 Telco-OTT partnerships. Along with mobile identification, operators can bring to the table their relationship and knowledge of the customer as natural big data companies. Big data analytics, with the potential to create a unified view of a customer, is the other key operator asset capable of eventually taking the Telco-OTT partnership to the next level.
Third is traffic offloading. In addition to shifting demand from peak to valley time periods, telcos can alleviate congestion by shifting demand off their cellular networks on to supplementary networks such as wi-fi hotspots or long term evolution unlicensed (LTE-U). Mobile operators seem to be blissfully ignorant of this opportunity.
As home and office users switch on to wi-fi hotspots wherever they can find one, it provides a unique business proposition to the telcos to leverage techniques such as SIM-based authentication to provide seamless wi-fi handoffs, thus saving precious macro cellular spectrum, at the same time providing an enhanced user experience.
LTE-U is being standardised by the industry association; 3GPP also provides a seamless way to connect 4G customers across macro cellular networks and micro unlicensed spectrum-based networks. Realising this, mobile operators such as Orange in France provides a $3 bundle of 3G and wi-fi hotspot access to its customers.
Fourth is the new opportunity being unleashed by machine-to-machine communication and the associated Internet of Things (IoT) architectures being deployed to connect various sensors and devices. Telcos are in a unique position to enhance their business value by offering their carrier infrastructure to provide connectivity to millions of devices in the IoT space.
The Narrowband IoT (NB-IoT) recently ratified by 3GPP provides the technology pathway for telcos to offer IoT services in their allocated licensed spectrum with guaranteed quality of service. The data collected from IoT devices can be very valuable to the telcos for offering customised business services.
While these opportunities are knocking at their doors, why are telcos hiding behind call drops and spectrum scarcity issues? Is it the operational burden that does not let them think out of the box and take the OTTs head on? Or is technology outsourcing, once lauded by all, and characteristic of the Indian telecom industry, playing spoil sport by robbing telcos of technical talent, making them purely operational run-of-the mill machines?
Telcos certainly have a role to play in today’s app economy. They may not be able to do this on their own, as much as they would like to, as in voice telephony. Alliances and partnerships with OTTs, content providers, IoT vendors, and system integrators are crucial to win the battle. Is anyone listening?
Sridhar is a professor at IIIT-B; Raja is the AVP of Persistent Systems. The views are personal