At Mobile World Congress 2014 in Barcelona, SingTel CEO Chua Sock Koong was reported as “call[ing] on Australian regulators to give carriers like Optus the right to charge rivals WhatsApp and Skype for use of their networks or risk a major decline in network investment.”
With the telecommunications industry unable to monetize over-the-top (OTT) traffic, telcos will struggle to find the funding they need to improve their infrastructure — meaning that network quality could deteriorate. Chua did concede that telcos should work toward partnering with OTT players.
What It Means
SingTel’s argument runs over familiar ground, similar to the ongoing net neutrality debate in the US. My colleagues suggest that telcos will offer tiered access at tiered pricing to OTT players in the future, charging higher prices for better connection speeds and greater data traffic. While I don’t doubt this, price-sensitive Asia may be a harder nut to crack; telcos here run the risk of customer churn by raising service prices.
Aside from speeding up its rate of service innovation, SingTel should:
- Pursue OTT players as network co-investors. In the age of the customer, high-level customer experiences lead to profitability; telcos need to scrupulously pursue OTT players to exploit the opportunity. The recent Netflix/Comcast deal points the way forward: It’s an example of an OTT player recognizing an opportunity to fund its customers’ experience and work with a telecom provider like Comcast to achieve that business outcome. SingTel should be encouraged by this example to do the same.
- Become a big data service provider. The data and analytics from mobile devices and systems that telcos now have access to can help them change the game — as a big data service provider. By offering data analytics services to businesses to improve the customer experience, SingTel could help them grow. One such value-add is the sponsored data model. This is where companies underwrite specific content for a mobile operator; the operator’s customers can access this data for free, without affecting their monthly data plan allowance. AT&T, for instance, already offers this service in the US. Big data could offer new insights to sponsored data that improves targeted user advertisements and calls to action.
- Differentiate with localized, contextual information. SingTel had 468 million mobile users across Asia last year, to whom a localized, contextualized play is highly relevant. SingTel’s advantage is in localizing contextual information, either in-country or through its investments in other mobile operators — something OTT players tend not to do very well. Given that advantage, SingTel should work at combining local data, integrating mapping information, and linking users to highly relevant goods and services to improve the stickiness of its services.
As data usage increases, so will the cost. In Asia, I expect the telco/OTT player model to take a similar path to that painted by my colleagues, but following a partnership or revenue-sharing approach. After all, that would still positively affect the customer experience. Wouldn’t you agree?