Andrew Kwok, President of International & Carrier Business, Hutchison Global Communications
2017 is an unusual year, as we continuously witness many changes in the telecommunications industry. Internet companies such as Google are beginning to offer telecommunications services, while many wireless service providers are jumping on the OTT (Over-The-Top) bandwagon. Products and services are increasingly customized for users and are expected to be delivered instantaneously.
Such strategic cross pollination between telecoms and OTTs sounds attractive to many traditional telecommunications service providers. However, it is imperative to think through the strategic intent and the associated risks before investing in resources. This article aims to touch on HGC’s experience in fine-tuning the evolving OTT/telecoms partnership.
“Traditional telecoms operators and OTTs should focus on their own core competence and cooperate to enrich the coming digital era”
OTTs are a special breed. Almost by definition, OTTs are designed to be agile and can quickly adapt to new user demands. They are created to serve a very well crafted, unfulfilled segment within each relevant market. For example, Facebook fulfills users’ need to share their personal life, while Salesforce is designed to assist enterprises with customer relationship management. OTTs develop the necessary skill sets and product offerings to help a particular segment of users to perform a specific task. They are dynamic, quick in actions, and software application-oriented.
On the other hand, traditional telecommunications service providers offer a variety of public telecoms service, similar to an electricity supplier. With grounded roots in the government, they may carry corporate cultures such as bureaucracy, and may thus require a longer decision-making process. The above features, however, are needed as the investment and build are of bigger size and with longer-term commitment, including their return. These basic foundations established by traditional telecoms players are necessary for launching new OTT services in a speedy way like what we are seeing today.
Having said that, we can see the trend of mega OTTs leaning towards traditional telecom business, such as Submarine cable investment, IDC, cloud services, etc. so as to gain cost control. On the other hand, traditional telecoms operators are launching OTT-like services, such as content services, gaming, music, etc. together with services operators. Nevertheless, under this trend, traditional telecoms operators and OTTs should focus on their own core competence and cooperate to enrich the coming digital era.”
To embrace the transforming digital era, it is necessary for traditional telecom service providers to create new revenue stream by helping OTTs expand their business in a global scale. Telecom service providers have to recognize the need to further transform, not only in terms of product offering, but also of business processing. For example, instead of only providing connectivity and data/voice telecom services with high network qualities, telecom service providers with fixed and mobile convergence services can make use of this advantage to help OTTs acquire targeted customers. Telecom service providers can deliver OTTs’ content and help them gain eyeball coverage.
In contributing to the evolving ecosystem, it is essential to nurture strategic partnership with OTTs. Telecom service providers can not only provide customized solutions, but also adopt a revenue-sharing business model on a case-by-case basis. Moreover, telecom service providers can offer additional IT support, managed services, end-user services, value-added services based on global reach, data centers, and cloud infrastructure, etc. to further strengthen collaboration ties with OTTs.
What’s next? To maintain growth momentum and relevance with the emerging OTT/telecom ecosystem, cloud based solutions, such as Software Defined Networking (SDN), user analytics, and advanced Application Programming Interface (API) management tools, are important topics for telecom service providers to explore.
Hutchison Global Communications (HGC), a full-fledged international telecommunications operator, is a subsidiary of Hutchison Telecommunications Hong Kong Holding Limited.