The survey, conducted by STL Partners as part of its Telco 2.0 initiative, is the first one to include perspectives from both OTT players and CSPs. It highlights responses from 25 major OTT providers (including Google, Fox Networks, Warner Brothers, American Express, Microsoft, Salesforce.com) and 15 communications service providers, including Orange, Verizon, AT&T, Deutsche Telekom, Etisalat, SingTel, and Turkcell.
The survey highlights a growing convergence between the views of CSPs and OTTs as to the areas for cooperation and opportunity. While the relationship between OTTs and CSPs is often categorized as hostile, the research shows that this is not the case. There is strong alignment between OTT willingness to adopt, and CSPs willingness to provide new services in the areas of Profiling, ID/Authentication, Payments, and Network Quality of Service.
Nonetheless, CSP relationships with OTT providers are largely transactional and tactical, the study found. Both upstream and operator interviewees believe the principle barriers to change are the operators themselves being unable and/or unwilling to appreciate the opportunity and make the necessary changes (rather than technical or cost issues). Unless operators learn to collaborate with OTT providers, they run the risk of further disintermediation in the value chain and commoditization of their services. CSPs often struggle to execute strategies that require significant organizational change. As a result, most CSPs have strategies to partner with OTT providers, but their execution is slow or non-existent. Moreover, collaboration with OTT providers may require CSPs to collaborate with one another to create federated or clearinghouse services, which presents further execution challenges.
Telecom operators are caught in a prisoners dilemma which is preventing them from collaborating among themselves and with OTT application and content providers. As a result, they are struggling to make the necessary changes to unlock value for themselves, for third-party businesses, and for end-user customers, said Chris Barraclough, MD and Chief Strategist at STL Partners. The research reveals that the desire for individual players to pursue service differentiation is actually inhibiting value creation at the industry level. The time has come for operators to work together to build value for third-parties in an effort to better serve consumers.
Risk of fragmentation is very real for operators if they dont take the necessary steps to unlock the value of third-party partnerships, said Michael Manzo, CMO of Openet. Rather than a lack of interest, operators are faced with cultural limitations; however, we can expect to see a change in the near future. The same need for a change applies to their execution platforms, which are currently too uncoordinated, too slow, too closed, too custom, not OTT-customer-oriented. So, a better breed of software, for a new breed of customer is required.