Service Innovation and OTT Providers

There are rules of successful service business. You need to be effective in terms of managing your costs, you need to personalize the services you are providing, you need to differentiate your services and offerings, you need to increase your quality of service and satisfy your customers to avoid them leaving you. In the mean time, you need to cope with lots of regulatory policies and keep your brand name strong.

Among those, one of them needs special attention as the rules started changing. This is the service differentiation. Have you noticed, your CSPs service differentiation lately? 2G, 3G Voice, SMS, MMS, RIM, Data, personalized ringtones, wap site etc. These have not been changed for a long time. The CSP is fully aware that it needs to differentiate as much as it can. And, most CSPs, apply this differentiation on the Product Offering level. They are creating multiple offerings that differentiate in services combinations, prices, SLAs (if available), etc. There are no new service offerings. Just the product offerings on the marketing level.

While telecom operators seems to operate mostly on Layer 3, the network layer, Layer 7, the Application Layer, provides endless opportunities. Since telecom operators do not pay much attention, someone needs to. And a new type of party appeared in the market: Over the Top Operators (OTT). Google, Amazon, SaaS Providers.

These providers develop applications that will be delivered over telecom operators connectivity services, mostly data. And, they are using the operator as a dump data pipe.Offcourse with the increase in OTT and their usage, telecom operator’s revenue increases.
Vendors are pushing operators to participate in service innovation but do the operators care? It seems not. It seems, most of the operators have chosen to act as a dump pipe and collect the usage revenues. Things do change rapidly in this sector and offcourse this situation could change easily. On the other side, operators still have a way to influence OTT usage : utilizing their SDP systems to enable OTTs to innovate more services. Opening service creation platforms to OTT providers, feeding ideas to them. In the mean time, providing the best service on the network level, focusing more on service level management processes.

We will see in the next years what will operators decide: To stay at the network level or level up and compete with the OTTs.