ZON Multimedia: "Everybody seems to be moving to the OTT arena"

The Portuguese cableco’s Executive Director Luis Lopes gives his thoughts on the growing importance of over-the-top (OTT) services to ZON Multimedia, and the business models he expects to support ubiquitous wifi.

Where does ZON currently stand in its wireless broadband initiatives?

ZON has long recognised the importance of mobility in it’s triple-play strategy, namely broadband availability.

In 2008 we partnered with global free wifi community FON, enabling our residential and SoHo router as hotspots to share connectivity with other FON users. This way we’re providing free wifi connectivity to our customers around the world.

Currently ZON already has more than 500,000 hotspots in place and every installed router is a pre-enabled wifi hotspot.

ZON strongly believes in anywhere broadband access and has positioned to play a role in this market with it’s strong bet on wifi access. Enlarging the footprint and excelling in user experience are currently our main challenges.

How can wireless offerings improve customer experience and raise ARPU?

There has been a dramatic change in the way customers use content, with streaming of video and audio gaining a key role in customers’ preferences.

Also, smart devices like smartphones and mainly tablets together with cloud services and social networks are setting a fast pace in service development and customers’ needs, with always-on connectivity as a backdrop for this transformation.

Not forgetting the importance of over-the-top services, where players like ZON will certainly have a critical role, transforming their more traditional offer to meet the demand for these services.

How can a business case be constructed for offering free Wi-Fi on an international scale?

Prior to any other, discussion of the business model for Wi-Fi “ubiquity” is crucial. One thing is for sure, nothing is free, which means one way or another wifi will have to be paid for, or else there will certainly be no business case for anyone.

Any model that we come out with will have to guarantee adequate remuneration and incentives for technology suppliers, infrastructure developers and service developers.

We see three types of models that will probably occur (some of them being already in their first stages): pure wifi infrastructure developers; global alliances including infrastructure suppliers and telcos; and global roaming agreements. In some cases, probably a mix of some or all of these.

Mobile operators’ positioning will also be critical to wifi development, namely with 4G offers. Do the networks complement each other or are they pure competitors on broadband mobility?

This question will certainly have different answers depending on the markets, it’s integration level and competitive intensity.

One thing to bear in mind is that whatever the business model is, customer experience is critical to success, and to operators’ ability to monetise the networks.

How can service providers continue monetising wireless broadband in the future?

User experience is critical to monetising wireless access. Customers will not be willing to pay for a lousy connectivity service, bearing in mind that the threshold has already been set at a fairly high level.

Streaming services, namely video, are putting pressure on network capacity but are in fact what customers want and are also very interesting for operators.

Everybody seems to be moving to the OTT arena, both as a churn reduction strategy but also in order to find new revenue streams and increase customer ARPU.

Operators are well positioned to take advantage of new service development around their more traditional services, for instance with video content services or communication services.

But one thing remains key, the availability of quality broadband access.

There’s certainly opportunities for excelling in broadband access quality – and for business models that allow players to monetise the networks, directly through customers or indirectly through service developers.

Service developers will probably have to consider connectivity as one of their bottom line items and adjust pricing strategy to the fact.

Another key topic is mobile operators’ strategy towards mobile data networks. How strong are they willing to invest in 4G and how can wifi help to improve mobile data economics?

To sum it up, the need for good quality wireless access exists, so the market will find ways to make it available to end users as they demand it.

Luis will be speaking at the Broadband World Forum 2012 event taking place in Amsterdam on 16-18 October. For more information and to register, please visit http://broadbandworldforum.com