Are the Telecom Operators Losing Their Revenues Against Social Media or Will They Going to Leverage the Social Media Factor to Increase It?

Topics: Nokia, Strategic management, Instant messaging Pages: 5 (1510 words) Published: January 14, 2013
Source: Staying relevant in the age of over-the-top services A triangular value proposition by Nokia Siemens Network
Over-the-top players changing the game for Traditional operators The companies that provide services on top of networks are driving much of today’s innovation. Unlike conventional communications service provider (operators) businesses, where the services and infrastructure are linked and network operators control the value chain, OTT services are delivered without any affiliation with the network. But opportunities are open to operators that add value to the use of over-the-top services. Traditional operators built their businesses on communications networks, but OTT providers have decoupled services from networks in terms of both the technology and business. Broadband connectivity is a growing business, yet operators must find ways to generate new revenue streams and avoid losing relevance within the value chain. OTT providers today wield immense power in the market and include household names in content (YouTube, Netflix or Lovefilm), advertising (Google), communications (Skype and Facebook), commerce (Amazon and eBay) and device platforms (Apple, Microsoft) There are huge rewards at stake. For example, Facebook had more than 800 million subscribers in January 2012 - reaching more than half of the online population in many countries. Skype’s VoIP service increased its share of international call minutes from 8% to 25% between 2008 and 2011. Results like these mean that revenues for over-the-top service providers are predicted to grow by more than 40% between 2010 and 2015. The good news is that with the right approach, operators can evolve their business and occupy key parts of the value chain, even as the relationship between OTT players and end users gets stronger. Key questions for operators

* What are sustainable value propositions in the new business environment? * How can we maintain a relevant position in the ecosystem? * How can we adapt the business model to benefit from OTT? * How can we benefit from partnerships with OTT players?

Competition and Cooperation
Most OTT providers began by focusing on one link in the value chain, such as Google’s search engine or Apple’s devices, but they’re now broadening their influence. So Google is expanding from its original position into apps, social networks and devices, while Apple is expanding into apps, content and social networking, for example. Their aim is to support and protect their core businesses, so not every area of operations is viewed as a standalone profit generator. There might therefore be opportunities for operators to compete against them successfully in areas outside their core competence. There might also be opportunities for partnering with OTT providers in areas where they do not have a core competence. An obvious example is the provision of managed connectivity services. For instance, cloud services work better when connectivity is managed end to- end and that’s something that only network operators can provide. Creating long-term partnerships is another possibility. A good example for a win-win situation: operator billing brings consumer convenience with the effect of an increase in paid downloads of 70% resulting in OTT revenues raise of 49% - despite higher transaction cost of 15% while credit card company takes 3%.

OTT is driving the operator business, not vice versa. However, operators can be much more than a utility in the age of OTT, because they still retain key assets. Networks: Only network operators can provide the quality of service that the new generation of video dominated OTT services and applications demand. Customer relationships: operators enjoy an unrivalled intimacy with end users. They can leverage the resulting insight, trust and access to provide enhanced services for both their upstream customers (OTT providers) and downstream customers (end users). Business: Agility is the key word, with faster...
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