Facebook Home launch: It’s time for telecoms to work on OTT

Telecom Lead America: Following the launch of Facebook Home, which can disturb telecom operators’ revenue streams, several companies shared comments on how operators can differentiate themselves from OTT brands, retain voice market share and monetise data services.

For telecom operators, the risk is that the Facebook Home, which is available on HTC’s First smartphone in the US on AT&T network, puts Facebook’s communication services front and centre on the device and makes them easier to use and more integrated with the core experience on the device. The dependence of Facebook on telecom operators will be reduced as Home can accelerate the shift from carrier services to over the top (OTT) services.

On Thursday, Jan Dawson, chief telecoms analyst at Ovum, said: “It should be a big boost to Facebook Messenger and the associated voice and video services,”

Ovum estimates that social messaging cannibalization of SMS revenues will grow from $32.6 billion in 2013 to over $86 billion in 2020. This means that OTT will have a huge impact on existing telecom operators if they do not execute their strategies properly.

For instance, in a December 2012 note, IDC recommended that Saudi Arabia’s telecom service providers to expedite the realignment of their product and service portfolios to match market dynamics skewed towards the growth of cloud, mobility, and OTT services.

Mobile voice services are changing rapidly. Once the key revenue generator for operators, voice is now being fought over by numerous players, including OTT providers such as Skype and Viber, as well as Internet giants, such as Facebook.  There has never been so much competition for voice as there is today.

Meanwhile, Google whose Android is supporting Facebook Home, may be affected. J.P. Morgan analyst Doug Anmuth said Home may increase the pressure on Google to find ways to get people to spend more time on its Plus social network, which so far hasn’t been as magnetic as Facebook’s hangout.

AP reported that Facebook CEO Mark Zuckerberg said Google was aware of the project, but Facebook didn’t work them to create Home. Asked if he believed Google could change tactics and restrict apps like Home, he said it was theoretically possible, but highly unlikely for Google to do a “180-degree change” in its stance on Android’s openness.

Telecom industry feels that operators have a unique advantage, by being able to provide interoperability for both VoIP and VoLTE applications. Operators have the experience of connecting consumers to different networks and geographies and can apply this experience to their applications. This will differentiate their offerings considerably from OTT applications, which generally have closed user groups, making them a much more appealing service for consumers.

“Differentiation for operators is key to keeping their market edge in a highly competitive landscape. In addition, they must take control of their services’ roadmaps. This will provide them with the ability to innovate for themselves, and adopt the innovations of others, without being dependent on any third party,” said Mark Windle, head of marketing, OpenCloud.

The key step is that operators must break away from the habit of accepting the compromise of proprietary, closed solutions that are expensive and time-consuming to customise.  Instead, they should harness the power of open service-layer solutions, and the independent developer ecosystems that come with them, in order to cost-effectively establish the competitive differentiation needed to build and retain market share.

To differentiate themselves, operators need to leverage their data assets. Smarter subscribers want constant access to social media and the ability to send and receive photos on the move. The demand a modern, connected lifestyle and expect their mobile device to deliver the wide variety of entertainment, information and connectivity options to help them live it.

Lyn Cantor, CEO of Tektronix Communications, said: “Operators themselves have the power to introduce new commercial models, deploy profit-enabling analytics, troubleshooting tools, and techniques and approaches that would greatly benefit OTT applications.”

Mobile service providers have more access to granular details that provide more actionable intelligence about their business, and their customers, than ever before. Utilising this data enables them to develop new business models rooted in security and quality of service to enrich the customer experience.

Telecom service providers and the OTT content vendors have traditionally had a strained relationship. OTT players will move into new areas such as mobile advertising.

IDC says with ad networks becoming efficient with improvements in targeting-technologies, OTT players will not feel the need to work with traditional mobile service providers for content services.

However, as the mobile platform gains significance, OTT players in the APEJ region will seek deeper ties with mobile operators for their bandwidth-heavy, media rich content provisioning.

By offering new and innovative services to drive revenue they can meet the lifestyle expectations addressed by OTT providers, but with the added bonus of secure and uninterrupted connections – with no service drop in a roaming scenario, no frustration due to lack of interoperability, just happier subscribers prepared to pay for better services.

Arvind Krishna
[email protected]