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Oct 15

OTT App Providers, Telcos and Cable "Think Different" About "Out of Region" Sales

It is no secret that app providers and telecom, mobile, satellite and cable service providers "think different" about their respective "customer" bases and prospects. All access providers necessarily must work within frameworks set by regulators on a country by country, state by state or locality by locality basis.


There are franchises, certificates, spectrum or other regulatory requirements for being in business. That necessarily leads access provider executives to instinctively and logically think about services they can sell to people and businesses within their authorized areas of lawful service.


App providers, in contrast, do not have to "ask for permission" to be in business. In fact, an app provider wants the widest possible audience or customer base for their apps, irrespective of geography. Whether an app provider sells "packaged" software or cloud-based software, the typical goal is to sell "everywhere," as much as practical.


Telefónica is among tier one service providers exploring an out of region strategy based on apps, though it primarily remains a geography-based business. But the main reason service providers do not like over the top services and applications is that they generally represent direct competition for key products service providers sell. But that is one key to how things will change in the future. If a major reason over the top apps and services are disliked is that they pose a threat to revenue, then a major reason for adopting an over the top approach is if doing so can create new revenue opportunities.


That is not to say the task is easy. But many service providers have been "going out of territory" for quite some time, expanding into new geographies in a variety of ways, generally using both a licensed approach. What will happen in the future is more out of territory expansion using non-licensed, over the top approaches.

In fact, partnership between operators and OTT players are the way Long Term Evolution suppliers can prosper, according to Gulzar Azad, Head of Access for Google India Google India. In some ways, you would expect a major app supplier to say that. Access providers need to start thinking in terms of delivering services, not data plans, Azad suggests. Where service providers traditionally think in terms of offering services to their own subscribers inside their own geographical market, “what they could be doing is offering services that anyone can sign up for, because that’s where all this is going,” Azad says. The challenge, of course, is that this approach benefits a third party app provider more directly than an access provider. Still, the conceptual and practical leap will be explored, and sometimes embraced, by a wider range of service providers, eventually. Think of it as a shift of focus from “selling services to current customers, where we have network” to “selling services to non-customers who are out of territory.” The addressable market for the former is far smaller than the addressable market for the latter.

Source: IP Carrier