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A new Disruptive Analysis thought-leadership strategy report

Telco-OTT Strategies & Case Studies:

"Give it a name!": The overlooked rise of telecom operators' own access-independent Internet services, for communications, content, cloud & connectivity

Published February 2012 - 135 pages - BUY NOW

One of the loudest debates in today’s telecoms industry concerns the response of operators to so-called “over the top” (OTT) players.

Traditional telephony and SMS revenues are under threat from newer, Internet-based alternatives such as Skype and WhatsApp. At the same time, third-party web content and social networking companies such as YouTube and Facebook are making a huge amount of money – and driving high levels of data traffic – over the operators’ fixed and mobile broadband networks.

Operators are trying to work out what to do:

  • Charge customers extra to use such services ("Personalise")?

  • Differentiate at the network level & ignore the fracas about Neutrality? ("Prioritise")?

  • Attempt to extract money from these "upstream" OTT players ("Monetise")?

  • Partner with Internet OTT companies?

  • Compete collaboratively through new standards like RCS / RCSe

Disruptive Analysis believes that this debate is too polarised into a “them and us” discussion. Industry bodies like to suggest that “Real Telcos” are inherently different from newer communications-industry peers such as Google or Facebook.

But technology advances – smartphones, fast IP networks and open developer platforms – make application and service creation easy. Software can deal with the effects of network glitches or congestion itself, without need for “network QoS”. Users are enjoying access to a huge smorgasbord of different applications and services; they are no longer forced to use a restricted, expensive and rather lacklustre menu of telco offerings.

There is another option: Telcos can launch their own Internet-type services. Disruptive Analysis calls this "Telco-OTT"

In fact, many telcos already offer their own OTT-style services via generic Internet access. In future, many more will do so – there are some very strong arguments that most or all services thrive when “decoupled” from network provision, at least in part.

Disruptive Analysis believes that operators need to go on the attack. Operators need to exploit the scale and rapid adoption of billions of Internet users, who have ever-faster devices and data access, using similar tactics to the familiar web- or VoIP-type providers.

Telco-OTT enables operators to

  • Expand their user-base reach to the scale of the multi-billion person web, especially for new services, in the same fashion as Google or its peers.

  • Use the Internet’s ubiquity as a way of improving existing access subscribers’ experience when they are “off-net”, for example helping them access their TV or voice services, from PCs or mobile devices connected via other networks.

  • Offer “outside-in” services to their access customer base, using the cost and simplicity advantages of using the public Internet to host and deliver telco applications “in the cloud”, rather than running them in-house.

Segmenting the landscape, Disruptive Analysis has outlined four main Telco-OTT service categories:

  • Content, video & portals

  • Communications, social networks & identity

  • Enterprise communications, security & cloud

  • OTT connectivity

Each has its own opportunities and challenges. None are easy to monetise, and experiment (and sometimes failure) will be needed. The bottom line is that operators need an “attack” mode against Internet players, as well as a defence. Customers want open-Internet services – they like the choice and flexibility, and that trend is unstoppable. Partnering will only go so far – telcos also need to innovate with their own offers. Operators face formidable regulatory, organisational, staffing, technology and competitive challenges in making their own Internet services as valuable as their peers’. Yet if they are to survive in the long-term, they need to embrace OTT, not fight it.                     If you can’t beat ‘em, join ‘em.

This new report from Disruptive Analysis explores the rationale for Telco-OTT, looking at the key categories, the advantages & the practicalities. It identifies more than 80 existing Telco-OTT services, across all the categories above.


1. Executive Summary

2. Introduction: what is Telco-OTT?
    Many operators are already buying into the OTT vision
    “Give it a name”
    The dumb pipe & “over the top” myth
    Why OTT business models are seen as a threat
    Hypocrisy, opportunity or expediency?
    Fixed, mobile or converged?
    Can operators actually monetise OTT services?

3. Telco-OTT landscape: Directory & Segments
    Telco-OTT segmentation
    Telco-OTT services “master directory”

4. Why is this happening now?
    Service fragmentation – QoS isn’t everything
    Addressing user behaviour: Ubiquity vs. fragmentation
    It’s all about Freemium
    Failures of the past – have we learnt the lessons?
    The role of two-sided business models & upstream customers
    Global reach
    LTE and all-IP mobile networks
    The impact of WiFi
    Evolution of the web and application environments

5. Content, video & portals
    Web portals
        Case Study: Telefonica Terra
    Download, appstore and gaming sites
    IPTV and Internet video
        Internet video & social TV

6. Communications, social networking & identity
    Introduction: the hold of the old, the lure of the new
        Why do new telco-driven communications services fail?
    Key issues for communications services
        Assumptions and legacies in the telecom industries
    Is communications standardisation & ubiquity needed?
        Smartphones + apps = communication fragmentation
        Where does IMS fit?
        Could IMS somehow be used to deliver OTT services?
        OTT-IMS as secondary access to existing telco voice/messaging services
    Telco communications services in the IP era
        The need for consolidation in basic voice & messaging
    Voice, VoIP, video-calling & mass-market telephony
        Fragmentation: A wide variety of operator moves into OTT voice & VoIP
        Standalone Telco-OTT VoIP & telephony services
        Partnerships with Internet-OTT players
        Remote-access / international-access OTT VoIP apps
        Fixed OTT VoIP over “naked” home broadband
        UMA and VoLGA
    Messaging, IM and presence services
        Is the Golden Goose of SMS about to stop laying golden eggs?
        Possible mobile operator responses to the coming SMS decline
        Hidden and “over the top” RCS for Telco-OTT messaging implementations
    Social networks & address books
        Case Study: SK Telecom’s Nate and Cyworld
        Case study: What went wrong with VF360
    Identity management & personal data
        Personal data brokers & data intermediaries
    Summary & conclusions

7. Enterprise communications, security & cloud
    Telephony, collaboration and unified communications
        Softphones and remote access voice / unified communications
        Mobile corporate voice
        SIP trunking
        Business social networking
    Cloud services
        Case Study: Telefonica Terabox & Aplicateca
        CDNs (content delivery networks)
    Other business process enablers
    M2M enablers

8. OTT connectivity
    IP-VPNs & remote access
    WiFi Offload / Onload
        Case study: O2 OTT-based WiFi Onload

9. Practical & operational issues for Telco-OTT
    Investment justification
    Protection from legacy fiefdoms and internal politics
    Exploiting telco assets to differentiate from other OTT players
    Incentivisation of staff
    Revenue classification & financial reporting
    Build vs. partner vs. acquire software
    Telco-OTT infrastructure & architecture considerations
    Standards – inhibitors or accelerants of Telco-OTT?
    Exploit all the tricks & tools open to software companies
    Net Neutrality, OTT services and the Law
    Pure OTT vs. on-net optimisation
    Branded smartphone apps
    Hardware approaches to Telco-OTT

10. Conclusions & recommendations
    Market status & growth for Telco-OTT services
    Telco positioning for OTT services
    Recommendations: For all operators
    Recommendations for fixed operators
    Recommendations for mobile operators
    Recommendations for network, device & software vendors
    Recommendations for investors & consultants
    Recommendations for regulators & industry bodies

Background to this study
About Disruptive Analysis

Table 1: Open vs. closed Telco-OTT services
Table 2: Master Directory of Telco-OTT services, January 2012
Table 3: Standalone Telco-OTT VoIP & telephony services
Table 4: Telco partnerships with Internet-OTT players
Table 5: Remote-access / international-access OTT VoIP apps
Table 6: Telco-OTT social networks and addressbooks
Table 7: Femtocell services – OTT deployment model vs. non-OTT
Table 8: M&A transactions relating to Telco-OTT services
Table 9: Examples of Telco-OTT in 4 service categories & 3 delivery modes
Table 10: Operator-by-operator involvement in 4 categories of Telco-OTT service

Figure 1: Today’s on-net & Internet OTT services vs Telco-OTT options
Figure 2: Tier-1 telcos have publicly acknowledged OTT opportunity
Figure 3: Pipes and pipers: dumb or happy?
Figure 4: Three models for Telco-OTT services
Figure 5: Communications fragmentation is driven by user need
Figure 6: Many telcos operate conventional OTT-style web properties
Figure 7: Operators extending their OTT portals to music & gaming
Figure 8: Some operators are already being very clear about OTT-TV
Figure 9: Various operators already offer YouTube-style Internet video
Figure 10: Orange’s forthcoming SoTV platform points to OTT Social TV
Figure 11: 6 models for future MNO voice/comms business models
Figure 12: Voice is becoming more than just a synonym for telephony
Figure 13: Evolution path for Telco-OTT voice services & apps
Figure 14: Full, open Telco-OTT voice services & apps
Figure 15: T-Mobile Bobled makes its OTT status clear
Figure 16: Internet-OTT / Telco-OTT partnerships
Figure 17: OTT voice / UC extensions of telco-hosted comms services
Figure 18: Enterprise services involve mix of on-net access & Telco-OTT
Figure 19: “Bring your own device” will drive need for Telco-OTT
Figure 20: BT Onevoice - an example of a business Telco-OTT voice app
Figure 21: If some users are based on Telco-OTT access, why not all?
Figure 22: Telco public cloud services may be on a “Semi-OTT” model
Figure 23: Telco “Full-OTT” cloud service model
Figure 24: Many telco B2B enabling services imply OTT end-customers
Figure 25: M2M enabling services: key corporate Telco-OTT opportunity
Figure 26: Telenor Objects offers OTT-style enablement for M2M
Figure 27: Operator involvement in WiFi includes offload & OTT onload
Figure 28: Revenue recognition & ARPU segment reclassification
Figure 29: Even on-net access subscribers may use Telco-OTT
Figure 30: Examples of Telco-OTT smartphone apps
Figure 31: Positioning of telcos for Telco-OTT vs Internet-OTT activities

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