In recent times, over the top providers have been billed as the operator’s nemesis. The message has been rammed down their throats: Skype is going to erode your voice revenues, WhatsApp will signal the demise of your SMS offering and YouTube is going to put tremendous strain on your network, offering you nothing in return. They are the Goldfinger to your James Bond; the Joker to your Batman, the Crystal Skull movie to your Indiana Jones trilogy.
But the world’s operators laugh in the face of danger, and seven out of ten of them have defiantly declared that they’re not afraid – they don’t even see OTT players as a threat at all. In fact, they perceive the “OTT threat” as an opportunity, according to a series of telephone interviews conducted by research firm Coleman Parks for revenue management firm Amdocs.
Exactly what this opportunity is and how they aim to capitalise on it appears not to have been discussed in a lot of depth on these phone calls though. The idea of providing faster speeds to high value subscribers of OTT providers appears to be a non-starter, due to regulators’ net neutrality policies in certain markets.
In the Informer’s view, the real opportunity could be in direct operator billing. Skype recently integrated direct operator billing into its offering, and although at first, this was seen as a final death knell to operators’ voice businesses, the move actually means that operators find themselves at the heart of an OTT player’s business model. Morten Brøgger, CEO of Mach, the vendor that equipped Skype with its solution, argued that operators can now start to win market share from the major credit card brands and companies. The firm even sees opportunities beyond digital goods and services and reckons there could soon be space for them in facilitating the purchases of physical goods.
The Coleman Parks survey also revealed that almost half (42 per cent) of the operators surveyed even believe that they could offer any service an OTT player can deliver, but better. However, the Informer suspects these operators may have gotten carried away a little, sipping away on some Dutch courage during their phone calls.
In other news, there’s been a lot of back-slapping and celebration in the UK regarding the earlier-than-planned arrival of LTE services. Peace talks held by regulator Ofcom with the country’s operators, chaired by the UK Government’s newly appointed Culture Secretary Maria Miller, resulted in the announcement that the 800MHz spectrum being cleared and ready for 4G mobile services from spring 2013. This is five months earlier than previously planned.
It transpired that Ofcom had held discussions with TV broadcasters and the transmission company Arqiva and managed to secure the early release of the 800MHz frequency that was previously used for digital-terrestrial broadcasting. The auction itself still remains on course to be held in early 2013 though – a good while after EE launches its commercial LTE offering in the UK, which it has now announced will happen on October 30, 2012.
Francesco Radicati, analyst at Informa Telecoms & Media, credited Ofcom’s decision to give in to UK operator Everything Everywhere’s demands to refarm 1800MHz spectrum as key to this success.
“Ofcom has navigated this problem pretty cleverly – by giving one operator a headstart, it succeeded in getting the others to settle down and agree to speed up the process. It’s just a shame that the process took so long, and looked so precarious at times,” he said.
Others remained cynical though. The research firm’s chief research officer Mark Newman questioned whether the current situation does indeed take the UK’s operators a step closer to a level playing field, as the auction will only be for 2.6GHz and 800MHz spectrum.
“It’s all very well saying that O2 and Vodafone can come to market more quickly now, but is rolling out LTE on 2.6GHz as valuable as the 1800MHz spectrum that EE and 3UK has?” he asked.
“Looking at the global perspective, 1800MHz is the preferred LTE spectrum as it manages to strike that balance between dense urban coverage and more extensive national coverage.”
Bengt Nordström, co-founder and CEO of consultancy firm Northstream, thinks that the problem in the UK is that we’re just too polite; too mild mannered. He believes Ofcom could learn a thing or two by adopting the ruthless streak demonstrated by its counterparts across Europe.
“If the regulator acts in a stringent way, operators understand,” he said. “They might have their own views about the moves taken by the regulator, but by and large they would agree with them and know that there is no point in complaining or delaying the process.”
One person who is not known for being mild mannered is Steely Neelie Kroes. This week, the European Commissioner for the Digital Agenda issued a rallying call to Europe’s telecoms operators to help lobby for the release of funds totalling €9bn earmarked to support digital infrastructure projects including faster broadband roll-out.
“Are we going to take our place as the connected, competitive continent? Or are we going to stay antiquated and analogue?” she roared. “We need to persuade MEPs and national governments of this case – and urgently”.
In other news, the CDG (CDMA Development Group) is now heavily pushing the 450MHz band as a significant opportunity for spectrum- and capacity-poor mobile carriers.
At one time, the group was pushing the rapid adoption of CDMA2000 in what many perceived as rivalry against the 3GPP’s WCDMA standard. But with so many CDMA standard bearers migrating to LTE, the group has changed its focus to stay relevant.
One of the biggest problems facing an operator today is spectrum availability. But when the world’s last NMT network was switched off, in Poland, in June of this year, Orange found itself with a swathe of spectrum and an opportunity to offer something its rivals couldn’t.
The CDG reckons other operators could learn a thing or two from what Orange is doing with its CDMA450 network in Poland. The network is currently upgraded to Revision B, phase one only, which was a software upgrade to the network. A second phase hardware upgrade, where the network cards are swapped out in the base stations, could pump the network downlink peaks up to 14.7Mbps.
Meanwhile, Skype has set up a public wifi network in the UK and Ireland in a bid to diversify its offering. The service enables shopping malls, retailers and other businesses to deliver public internet access to customers free of charge.
Free Skype WiFi will allow Skype users to log in to any participating wifi location with their Skype ID using the Skype WiFi app. Users will be able to browse the web, engage with social media, access and send emails, shop, compare prices and download special deals from participating high street retailers.
The VoIP firm’s co-founder Niklas Zennstrom has also given his backing to a US start up which this week has launched the beta version of its service aiming to disrupt the wireless broadband market. FreedomPop will be offering 500MB of free 4G data usage to each of its customers using US wholesale operator Clearwire’s WiMAX network.
The firm will sell excess data beyond that at $0.01 per MB. Users will be able to trade unused data capacities with each other on a social network. FreedomPop said that it aims to switch the service onto Sprint’s LTE spectrum sometime in early 2013.
And finally, the Informer can hardly believe that today marks a full year since a man responsible for taking the telecommunications market to its next frontier passed away, and found an interesting interview with Steve Jobs from an issue of Fortune magazine in 1995, in which he said:
“You know, I’ve got a plan that could rescue Apple. I can’t say any more than that it’s the perfect product and the perfect strategy for Apple. But nobody there will listen to me.”
Thank goodness they eventually did.
Will regulators ever be able to catch up with the rate of change in the telco/tech industry?
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