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OTT Service providers - To compete or to collaborate?

As a proud owner of a new Samsung smartphone with a 3G connection, I recently downloaded WhatsApp and was thrilled with the ease of use and connectivity. I am hooked and now I would rather send a message via WhatsApp than send an SMS. Similarly, I would rather use Skype to make an international call than use the ISD. Way cheaper and more convenient.

On reading a bit, I came across the term 'Over-the-top (OTT) ' which is used to refer to services like WhatsApp or Skype that are available over the network services provided by the Telecom Service Operator. The Telco has no control over the content or distribution of these OTT services. Now, for an end consumer like me, these services are a great advantage. But the same certainly cannot be said of my Telco service provider whose direct revenue is being reduced because I am using the OTT services rather than my SMS plan or voice minutes. OTT services are very popular, so Telcos cannot bar or restrict these for the fear of facing a severe backlash from their end consumers.

The win-win situation is for the CSP to partner with the OTT providers. Both parties have certain strengths. The CSP's strengths are their brand equity, network quality and rich customer data. The OTT providers are the innovators that can help deliver a rich customer experience. By enabling the OTT providers to deliver high quality services, the Telco's can expect to get a share of the OTT revenues as well as achieve better customer retention and loyalty.

This is already happening in various geographies. Reliance Communications in India has launched a WhatsApp and Facebook plan for just Rs.16 a month. Similarly, 3 Hong Kong has launched a subscription based WhatsApp data pack and roaming pack with no impact to customer's data usage charges.

CSP's can also expose some of their key capabilities such as billing, charging, payments, customer preferences to partners via api's that can be used by the partners to develop services mutually beneficial services. Eg: Telefonica SA has partnered with Boku, the mobile payments specialist to provide "direct-to-bill" capabilities that enable consumers to buy from mobile app stores and charge to their mobile bills. The CSP gets a slice of this revenue and also strengthens the bond with its customers by offering convenient services.

That being said, the CSP needs to continue improving its core competency in terms of delivering high-quality communications and connectivity that forms the basis for a good customer experience through OTT or partner provided service.

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