The rise of smartphones and messaging apps has changed the way consumers communicate meaning mobile operators can no longer depend on receiving revenue from traditional services such as voice calls and text messages. As discussed in my last post, to tackle this issue, operators today are now keen to partner with over-the-top (OTT) brands. However, operator-OTT partnerships are still in their infancy and there are still three main challenges that operators need to overcome in order to make partnerships with OTTs a success.
- Agreeing the contracts
The main challenge for operators is understanding how they can implement partnerships and get them off the ground. One in three operators (32%) have no idea what a contractual agreement would look like in terms of margin split, staffing levels, setting KPIs and measuring the success of the partnership. Others are unsure how to deal with infrastructure complexities (26%) and overcome regulatory hurdles (23%).
For a partnership to work, it’s vital to agree a collaborative business model that both OTTs and operators can embrace. However, understandably, both sides come from two different worlds in their thinking and approach. More recently, both have been competing for the same user base, which can cause difficulties. Employing the expertise of third parties who already have partnerships with OTTs and operators and understand the businesses of both are often well placed to help overcome these hurdles.
- Meeting consumer demands
People today want low-cost, international communication options combined with the interactivity and functionality found in OTT apps. Mobilesquared predicts it will take less than two years until over 50% of mobile operators will experience 80% of their customer base using OTT communications. As a result, operators are looking at how best to meet this demand.
With consumer expectation and demand rapidly evolving, mobile operators will have to quickly align their legacy business models and processes in order to stay relevant with their customers. Working with OTT partners and figuring out how best to integrate their offerings to deliver a seamless experience to their mutual customers is a necessary step. Including data access as part of a customer’s standard bundle is one way to make it simpler for customers. More innovative use cases can include using mobile phone numbers, one of the most valuable assets the operators still own, as unique identifiers to enable the much needed seamless communication between people using traditional telecom and OTT services.
The benefit for OTTs in partnering with operators is that they can start to build a truly global user base by integrating traditional telco services. For example, in new markets where there’s no sufficient internet connectivity OTTs can use SMS-backup connection for their IP-based services.
- Overcoming privacy concerns
Another challenge that operators need to overcome is data privacy concerns while developing innovative new services. Over 50% of mobile operators have expressed concerns over protecting customer privacy. Meeting compliance requirements whilst monetising on the subscriber information will require both business and technological solutions.
Research shows that more than two-thirds of mobile operators (69%) would be willing to assist OTT providers to verify user information. Almost 40% of respondents said they would use the data to authenticate a user’s identity, and 31% to ensure compliance, provided a system was in place. Mobile operators have also indicated they would be willing to monetise gender, age, location as well as user behaviour and preferences.
Overall, the real challenge for operators is to become agile enough to exploit the emerging opportunities available to them. As the market moves towards seamless telecom-web interoperability, new opportunities are opening up for legacy services, beyond just charging for data alone. In order to curb declining revenue, operators will have to adopt the mind set of an OTT player and embrace innovation.
By Thorsten Trapp, CTO and Co-Founder of tyntec
