The challenge that operators face when making their business profitable and sustainable increased when Over The Top (OTT) players started offering services. Some operators believe that OTTs should pay a fee to the operators to help them invest in infrastructurem while others see value in the traffic that OTTs create.
Internet players, including telcos, invested over $30 billion annually in physical networks, facilities and equipment, and nearly $100 billion between 2011 and 2013, according to a study from Analysys Mason, as they are aware of the need of the physical internet structure to grow their business.
According to a report from Juniper research, annual mobile operator expenditures exceed $800 billion and several leading players face the possibility of costs exceeding revenues by the end of the decade without remedial action.
Experts recommend telcos to follow different strategies, but there is a need for a change on the base of the telecoms business model to maintain the growth.
In the following pages we bring you exclusive interviews from five experts on this crucial subject.
Click on the next page to read what Houlin Zhao, secretary general of the International Telecommunication Union (ITU) believes operators should do:
According to the secretary general of the ITU, Houlin Zhao, many people think that the OTTS are not investing in the infrastructure and he reminds that they are bringing new traffic to the network.“Without them, the traffic will be only voice and SMS and they will came with other ideas,” he said to CommsMEA.
“We have another problem: why the operator didn’t think about that. They are very smart, they have created these services to push further investment. We need to upgrade the infrastructure and get a good quality of services. We need to change our mind-set. Our operators’ business model is based on investment and the use of the network, but the OTTs offer you services for free, they don’t ask you to pay,” Zhao added. He believes that the operators need to embrace them: “You have to see the good opportunity. I hope that we can change this part of the mind-set here.”
Regarding the UAE, where the regulator restrict the use of Viber and Skype, Zhao said: “It is not good for the UAE to block the services and it is not good for business to see that there are other ways to approach it because they want to have the market there and also respect. You need a good environment to have a good business and sector and it is supported by a good authority. You have to respect them and cooperate with them.”
The ITU secretary General believes that regulators need to promote a better environment where operators can cooperate with OTTs.
Click on the next page to read Du CEO, Osman Sultan's response.
Osman Sultan, CEO at du
According to Osman Sultan, CEO at du, monetising data is one of the challenges that the telco industry is facing right now.
He thinks that the world of telecoms is becoming more complex, so operators have the need to differentiate themselves.
“This differentiation has to happen at various level. The first thing that we discover is that we need to market in a better way, the OTT players are more generic and we have the ability to target segment by segment and sub segment by sub segment. We need this data to become a better telco,” he explained to CommsMEA.
Sultan believes that analysing data in order to know what the customer want is the answer to become a better telco and offer customers what they are demanding.
“We have the data, so probably a lot of companies in the media or advertising space will be interested. There is a way to monetise this data, of course, here, the most important part of the framework, we need to stick to our obligations to protect customers’ privacy, we have certain obligations but sometimes non-nominal data is interesting and telcos have a lot of data to offer in that space,” he added.
Click on the next page to read the views of Ahmad Al Hanandeh, CEO at Zain Jordan
Ahmad Al Hanandeh, CEO at Zain Jordan
“We think of it differently, we understand fully that telecoms is going through a transformation and we know that it will require another way to do business,” said Ahmad Al Hanandeh, CEO at Zain Jordan, when asked about his opinion on OTTs.
He started the transformation that Zain Jordan is embracing in order to become a digital operator. The company is facing OTTs in a collaborative way and the telco is also expanding its business to create new revenue sources.
“OTT is only part of the challenges and it affects part of the business that has to do with the international calls. We are seeking strategic partnerships in the medical sector, educational sector, we have started our mobile services,” he said.
According to Al Hanandeh, the operator offers the infrastructure that the telecommunications sector demands in order to promote and offer telecoms services in the country.
“As the telecom, we exist as the infrastructure, same as schools, hospitals in other sectors. Now we have to define our role on the online sector and the future is coming. Most of the sectors in every country are talking about the smart government and the smart system and financial services and education and health. The mobile is becoming the sector that everyone is going to use,” he added.
“Today we have, as a telecom operator, to define what we have to offer. Is it transactional fees? Is it providing the way to the online? Only giving the access to the internet and forget about the rest? Which is actually what we are doing now, the minute you are online, and we don’t know anything about you,” Al Hanandeh said to CommsMEA.
He believes that operators can be more than just the infrastructure provider and the company wants to provide more value to the customer.
Next page - Scott Gegenheimer, CEO, Zain Group
Scott Gegenheimer, CEO of Zain Group
While many operators speak of the threat of OTT players, Scott Gegenheimer, CEO of Zain Group, sees many potential opportunities for leveraging customer information and partnering with OTTs.
“We are working with a lot of start-ups to face the OTTs. For me, working with OTT players is very interesting. For instance, we have a really good sales distribution billing information, which the OTT players don’t have. So if we can turn around that and start to partner with them, the operator can provide that sales arm. For example, the percentage of people in the MENA region with credit cards is very low, so we can actually work together and provide profitability to the OTTs,” he said.
“It is a difficult situation and all the operators are thinking about that. First, we have the OTT players and we don’t want to be just a connectivity player, we want to provide services on top. We are working on that. This is the reason why we are making this company shift, so that we can offer incremental services on top. For me the M2M space can be huge, there is a huge opportunity in smart cities in the region,” Gegenheimer added.
Next page - Sheik Saud Bin Nasser Al Thani, CEO at Ooredoo Qatar
“OTT service providers need us as much as we need them.” These are the words of Sheik Saud Bin Nasser Al Thani, CEO at Ooredoo Qatar when asked about OTTs.
Al Thani is aware of the innovation that these players bring to the sector and sees this factor as a positive asset for the telecoms industry, as they are changing the data consumption patterns and operators can benefit from the data growth that the region and the world is witnessing.
“We provide the foundation infrastructure that makes their services possible; they are driving innovation in the industry that we need to learn and be part of. By inviting these next generation partners to work with us, we are developing a mutually-beneficial business model,” he said to CommsMEA.
According to Al Thani, operators should embrace the changes in data consumption patterns and evolve their offerings to meet the needs of the people, in partnership where necessary.