In Business Model, Internet Access, Mobile

“OTT versus operators is dead,” argues John Strand, Strand Consult principal. “Partnerships will flourish, if not regulated out of existence” by regulatory bodies.

His argument is quite simple: “the two players need each other, and OTTs know it.” The argument, in broad outlines, is not new. Though some access providers have attempted to create their own over-the-top voice and messaging services, that generally has not worked well.

Instead, one might argue, there is more opportunity for collaboration in all other areas, where access providers might well find it fruitful to partner with OTTs.

That might not be an imperative for every access provider and every app provider. But you can imagine the potential value for any app provider, in any segment, when the app is promoted and bundled with access.

The value for a service provider in a competitive market (nearly all of the markets, these days) also is clear: the ability to create distinctiveness and add value.

You might think of what is doing around the world with mobile service providers, partnering to provide “Free Basics,” a suite of Internet apps that can be used by anyone with a smartphone, or in many cases even feature phones, without a mobile data plan.

The idea is to allow people to sample the value of the Internet, on the assumption that many people will discover they want to use the Internet, and hence will buy data plans.

“Music services such as Spotify and Deezer; video services like HBO and Netflix; newspapers and magazines—any and all content that can be bundled with traditional traffic packets that telecom companies sell will be bundled with mobile service for all devices,” Strand argues.

“We expect that the number and type of services that operators bundle with voice, SMS and data will explode,” Strand predicts.

Beyond the tactical implications, the shift might also highlight that the way “communications” problems are perceived, markets created and business models are created has undergone a fundamental shift, enabling all  “over the top” business models.

That creates big new opportunities for all sorts of firms that do not “own facilities” or physical networks. The existence of mobile virtual network operators, huge Internet app businesses, wholesale-based telecom companies and platforms to support business operations on a virtual basis provide examples of the new approaches.

Another way of looking at the shift is simply to note that all apps and services now conceptually can be delivered over any IP network, no matter who owns the content, software, transaction or other assets.

In a technology sense, everything now goes “over the top.” What remains are the business relationships: who “owns” the apps, services, functions and products.

That also implies a big change: no single entity can own more than a fraction of all the useful things that are enabled by the Internet. That, in turn, suggests that partnerships are more likely than “invented here” business models.

MVNOs, OTT app providers, Wi-Fi hotspot network aggregators, cloud-based services, content producers, studios, neutral co-location exchanges, competitive local exchange carriers, system integrators and others all use or buy services from networks, but do not own them.

The key take-away, from a business model perspective, is that the range of areas where some OTT providers and some access providers can craft new offers is quite large.

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