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What's stopping telecom providers from being active players in OTT?

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What's stopping telecom providers from being active players in OTT?

Advancements in telecommunication infrastructure have created immense potential for OTT players but telecom players themselves have somehow not been able to reap the benefits. Telecom operators are yet to find a revenue model that will be profitable for them and for now seem to be satisfied being only enablers.

“For now the formula is that we enable our subscribers to reach OTT players and vice-versa. My concern as a telecom player is still about monetisation, nobody can undertake a business for long if it does not have a break-even cost at the very least,” said Dipankar Ghosh EVP & Head- Content, Mobile Advertising & VAS - ‎Vodafone, on the sidelines of the recently concluded OTTv Summit.  

Globally, telecom operators are struggling to find the right value propositions with sectors that they themselves have enabled such as e-commerce and social media among others. According to a report by PricewaterhouseCoopers, “A few companies, including Orange, Telefónica, and AT&T have managed to build content and digital media franchises yet these are still dwarfed by their core telecom businesses.” Nearly 60 per cent of data consumption is backed by video, therefore industry experts believe that it makes sense for telecom operators to take a plunge into the OTT market.

The challenges that telecom operators face with regard to providing OTT video content is partly infrastructure-related. “While with the Jio revolution internet penetration has increased, our broadband speeds in non-urban areas still lag behind. We have a huge mass of audience that all the players are targeting but the content is only reaching some of the urban masses,” said Rahul Krishnan, CTO, Diagnal, tech partner ALT Balaji. He added that while OTT services such as WhatsApp are using data as their backbone, telecom providers are only able to sell data as a commodity and are unable to find a suitable revenue model. “That for me is the biggest challenge telecom providers are facing today,” he said.

Deliberating on the kind of content that could make OTT a profitable venture for telecom operators, Vivek Lath, MD GoQuest Media Ventures, said, “As far as content is concerned, entertainment videos are low-hanging fruits, but there are lot of other genres of video content like food and education that telcos can push and make money from because those will not be advertisement driven models, they will be pure-play subscription driven content.” He also said that vocational skill development videos might have a lot of takers in tier-2, tier-3 cities.    

If the challenges can be overcome, will telecom players become content providers? Ghoshal believes that telecom players have access to consumers and that’s their area of expertise. He strongly believes that content licensing and providing that content is not something telecom players need to venture into.

Currently, in India Airtel is experimenting with Airtel Wynk, a music OTT app while Jio TV aggregates content from more than 400 TV channels, and Vodafone partners with multiple OTT players like Netflix, dittoTV and offers live TV content from around 140 TV channels. Telecom providers do see the huge opportunity that the OTT market holds, and the day when telecom players enter the OTT battlefield as content providers might not be too far.

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