The benefits of partnerships between OTTs and operators
According to mobilesquared, the mobile network operator (MNO) opportunity for OTT communication globally will be worth US$42.9 billion in 2018, up from $4.2 billion in revenues in 2014. The partnership model will be worth $465 million in 2015 to mobile operators, rising to $12.8 billion in 2018.
Achieving this revenue relies on successful MNO and OTT partnership models. My last post was about the ways in which MNOs can build successful partnerships with OTTs – factors that included agreeing contracts, meeting consumer demands and overcoming privacy concerns. In this post, I will discuss the benefits mobile operators can expect from partnering with OTTs, and the reasons why OTTs would enter into the partnership.
First and foremost, MNOs benefit from the brand power of OTTs that are popular amongst the consumers they are trying to keep hold, or seek out. For an MNO offering customers, an OTT service will help drive customer loyalty, as well as attracting a larger customer base as the operator is able to provide cheaper access to such value-added services. This cheaper access to OTT services will help to boost messaging, voice and data usage on the network, and mean customers are less likely to abandon their mobile operator looking for better OTT access elsewhere. In addition, by enabling OTTs to integrate features such as seamless Web-SMS chat, MNOs can terminate cross-channel traffic on their network, and further increase their revenues.
By partnering with OTTs, operators can save the resources required for developing and managing their own services such as Tu Me from Telefónica, and Libon from Orange. These ventures have proven to be costly, time-intensive, and often unsuccessful in competing with the major OTT players, as well as being isolated to existing subscribers.
The Netflix partnership with Vodafone is a prime example for how MNOs can grow their subscriber base. This exclusive partnership offers Vodafone customers six months free access to the video streaming service when they sign up to the operators premium “Red 4G” data bundle. Similarly, Dropbox partnered with Deutsche Telekom in a deal that saw the file-storing and sharing service preloaded on the Android handsets of the network’s European customers.
The business opportunities are expanding as more users become familiar with OTT services. Various services can benefit from collaborating with MNOs for their subscriber information as well as connectivity.
Another scenario for operators is to partner with OTT players by renting out virtual phone numbers. Using virtual mobile numbers can provide added protection for private transactions and interactions when used as temporary numbers as seen in apps such as dating services. Phone-based authentication provides another strong opportunity for the two parties to work together to protect consumers from fraud, ensuring security for the users by using real-time number information and secure delivery path for user authentication.
The first step in making partnerships happen is for operators to examine their core competencies, as well as their limitations, and work out which opportunities make the most business sense for them. To do this efficiently they need to collaborate with a company that can bridge the complicated gap between the internet world and the telecoms world—and do so in the speed that many operators are not used to. Welcome to the new telco-OTT world!
The author of this blog is Thorsten Trapp, CTO and co-founder of Tyntec