introduction to telco-ott - disruptive analysis ltd and martin geddes consulting ltd

Introduction to

Telco-OTT (‘over the top’) Services

dean.bubley@disruptive-analysis.com

mail@martingeddes.com

© 2012 Disruptive Analysis Ltd and

Martin Geddes Consulting Ltd

Telco World

Service-centric

Telco-controlled devices

Telco-owned access

Telco-created services

Network roaming

OTT World

Experience-centric

Any combination of

device, access

and service*

Experience roaming

* Supported within any one ecosystem

This is the familiar world

of telecoms service

providers…

…and this is the world

they see encroaching on

their territory

The telecoms world today

Telco A Telco B

Telco C

On-net call /

SMS C-C

Interconnected

call & SMS A-B

IMPORTED

CLOUD

APPS IMPORTED

IPTV, WEB

CONTENT

EXPORTED

BULK SMS EXPORTED

CONTENT

DELIVERY

Interconnected/federated

services make up the bulk

of telecoms profits

The “traditional” vision of future IP/4G telecom

Telco A Telco B

Telco C

On-net VoLTE /

RCS C-C

Interconnected

VoLTE & RCS A-B

IMPORTED

HDTV,

SOCIAL TV

IMPORTED

M2M

SERVICES

EXPORTED

RICH APIs EXPORTED

QoS

DELIVERY

“More of the same” has

been the main strategy

response to OTT

Service

bundling

Subscription

based

Minutes &

messages

Phonebook

-centric

Converged

Services

Sessions

Ubiquity &

Interconnect

Customer

loyalty &

churn

Telco World

Regulated

This response is based on

unspoken assumptions as

to “what really matters”

Problem:

What worked in the past…

…won’t work in the future

Because in parallel….

Enterprise

Comms & BYOD

Consumer

Comms

Contextual

change

But telcos keep pursuing a

“convergence” approach

when “divergence” rules…

Federated telecom services (lowest common denominator)

Muliplicity of services

+ Multiplicity of devices

+ Multiplicity of networks

+ Multiplicity of ecosystems

+ Multiplicity of interactions

…and telcos rely on

“ubiquity” – buy they can’t

even deliver that any more

Device diversity means OTT models inevitable

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6

# connected devices owned

Probability of all of a user’s Internet devices being on a

single telco’s network

Free 3rd party WiFi

• WiFi roaming & Next-Generation

Hotspot

• Telco QoS (?)

• More devices (and rising)

• More (free) WiFi & 3rd party connections

• More places of use

• Roaming & federation scaling issues

• Slow uptake of triple/quadplay

On-Net

Off-Net

The math of a multi-device

world works against the

federated telco model

Service

e.g. Telephony

Product

e.g. Skype

Feature

e.g. Xbox Live

Function

Meanwhile, the Web is

turning telco services into

browser capabilities

NOW!

Changing user

behaviour

(apps are cool,

not geeky)

Going from

scarcity to

abundance in

apps

Operators need

to compete at a

service level

Good-enough

fixed & mobile

networks

Clever adaptive

software

makes OTT

work better

No more “you’ll

eat what you’re

given”

Unsustainable

number of local

service

creators

Collaboration is

too slow,

bureaucratic &

non-creative

Smartphone

& tablet

penetration

rocketing

Viral uptake of

apps

So it’s time for

a change of strategy

$1tn question

How can telcos meet the

OTT services challenge?

(deep breath…)

Answer:

If you can’t beat them…

…join them

(…phew!)

Telco World

Service-centric

Telco device

Telco access

Telco service

Network roaming

OTT World

Experience-centric

Any combination of

device, access

and service*

Experience roaming

* Supported within any one ecosystem

Telco-OTT World

Product-centric

Mixture of telco and

3rd party devices,

access and services

? Bring the best of both

worlds together

Telco World

Service-centric

Telco-OTT World

Product-centric

OTT World

Experience-centric

Telco device

Telco access

Telco service

Network roaming

Mixture of telco and

3rd party devices,

access and services

Any combination of

device, access

and service

Experience roaming

? Comms Content Cloud Connec

-tivity

There are four Telco-OTT

segments – already with

many products & services

How?

Build businesses that…

…use OTT strategies

Operators must offer OTT extension services

Telco A Telco B

Telco C

Interconnected call

C-B

On-net rich IP

call & UC C-C

Telco C’s domain

OTT extension

Operator A is at a

competitive

disadvantage

C-IPTV app on 3G

(A gets data

charges)

Telco-OTT disrupts call &

SMS origination and

termination regimes

A Prisoners’ Dilemma

effect forces losers to

carry cost, but no revenue

Logical end-point? Full Telco-OTT services

Telco A Telco B

Telco C

On-net QoS-

optimised call C-C

Telco C’s OTT

apps

We are seeing a

free-for-all to retain the

user & billing relationship

OTT is a trade-off for users

More choice of applications

Wider distribution for applications

Lower cost of usage

(Sometimes) better performance at low network load

Performance is - more variable, and - worse at high network load

Demand Make the trade-off to give

users a broader reach of

richer services

OTT is a trade-off for telcos

New markets & new customers

Extend value of existing services & retain customers

Remain relevant beyond transmission

Direct competition with Internet-OTT players & “cult of free”

Lack of control can damage brand if experience is poor

Stresses organisation and exceeds core competence

Supply Accept that your business

strategy needs to change

to achieve this

OTT-style

services

Telco-style

services Reach

Coolness

Exclusivity

Affinity

Functionality

Tailored

Personalised

Convenient

Rentable

Preinstalled

Simple

Familiar

Transmission

Storage

Universality

Delivery

Mobility

Ubiquity

Urgency

Accountability

Availability

Usability

Relevance Governance

Create value propositions

that address both telco

and OTT characteristics

Dependable

Example: Peer-to-peer messaging

OTT-style

services

Telco-style

services

Engineer!

Design!

Adopt a design rather than

engineering culture in

solving user needs

Application

performance

(speed,

accuracy,

responsiveness,

continuity)

Perceived

value

BEST

CASE

Accepta

ble

U

naccepta

ble

Mobile VoIP

WORST

CASE

Pick use cases which are

less sensitive to variable

or poorer performance

Mobile

telephony

Better

“best case” Worse

“worst case”

Other characteristics may be equally or more

important than the network

DEVICE

Screen size

Battery life

DISTRIBUTION

Pre-installation

Apps store promotion

REGULATION

Legality (e.g. intercept)

Numbering

CONTENT RIGHTS

DRM

License agreements

Understand & mitigate all

the bottlenecks to QoE

and value-in-use

What next?

Join in…

…everyone’s at it!

Comms

Content

Cloud

Connec

-tivity

Over 100 identified

Telco-OTT products in the

market.

Operator strategies & positioning vary widely

Telco-OTT enthusiasm

Strategic

focus

Tactical /

niche

Skeptical

Internet-OTT

enthusiasm

Key

partnerships,

customisation,

co-branding

Tactical

collaboration

Hostility

Source: Disruptive Analysis Telco-OTT Strategies report

Full details in report from

Disruptive Analysis

(click for information)

@disruptivedean

Blog: disruptivewireless.blogspot.com

@martingeddes

Newsletter: www.futureofcomms.com

Dean Bubley

Founder & Director, Disruptive Analysis Ltd

Martin Geddes

Founder, Martin Geddes Consulting Ltd

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