Turning knowledge into action Coping with OTT Richard Jones [email protected].
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Transcript of Turning knowledge into action Coping with OTT Richard Jones [email protected].
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 2 [email protected]
STRATEGY, TECHNICAL AND REGULATORY CONSULTING
World’s first gigabit everywhere network for an incumbent
Detailed planning support for $3 billion network investment
Creation of mini-NBN in Oman (FTTH)
RETAIL TRIPLE-PLAY OPERATOR (FTTH/B/xDSL)Rated number 4 in the World for service value
SWEDISH COMMUNICATIONS OPERATORThe clear market leader in Swedish open access
network automation and management space.20 networks managed with 200 service providers
GLOBAL COMMUNICATIONS OPERATORWorld leading experience in running ultra-
efficient open access and exclusive networksTargetting smart cities, campuses, alt nets
OW
NE
RS
HIP
AN
D L
EA
RN
ING
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 3 [email protected]
Times are changing…
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 4 [email protected]
Only 16% of mobile operators think overall revenues will go up due to OTT*
Times are changing…
Source Mobile Squared report
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 5 [email protected]
Cooper’s Law is now broken….
Lasted 100 years… now brokenRadio capacity doubles every 2.5 years
1G – 2G was 1000x increase in capacity
2G – 3G was 1000x increase in capacity
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 6 [email protected]
Consumer demand for faster fixed broadband will continue to grow
CAGR Compound over 10 years
Nielsen Bandwidth 50% 57x
Moore Computing 60% 100x
Source: Ventura Team study for FTTH Council Europe
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 7 [email protected]
Beta results from Ventura’s European model support the view that you have to select FTTH locations carefully
Only 50%-70% homes are economic anywhere (at most)
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 8 [email protected]
Bandwidth costs can be a killer
If you assume an unlimited broadband service then you can look at the monthly costs per user of providing IP transit
You clearly cannot afford to pay some of these prices so you may have to:limit bandwidth use per userfind ways to reduce your IP transit charges (tricky if you don’t have your own gateway)
Europe GCC Africa
Cost per megabit/s/month ~1 € ~150 € 1000’s €
Cost per user per month 0.25 – 1 € 10 – 20 € 100 – 200 €
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 9 [email protected]
How much more are they prepared to pay for double the speed?
Source: Ofcom
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 10 [email protected]
…and the challenges can be extreme
In one country, payback would take 500 years to renew a particular customer’s lineThe incumbent would rather give them a mobile contract and an iPad to go away
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2011 – Page 11 [email protected]
The fibre business case is challenging…
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 12 [email protected]
…and LTE is clearly easier
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 13 [email protected]
The impact of Internet content is clear…
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 14 [email protected]
…but it’s not TV versus computer any more
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 15 [email protected]
The OTT attack comes in many forms
TYPE OF SERVICE PLAYERS
LEGAL
FIXED
Live streamsCatch up TV BBC iPlayer, 4oD VOD (from pay-TV players)STB Virtualisation - TV on devices Sky Go VOD (subscription based) Netflix, New Sky serviceVOD free TED, Bloomberg, ivi.ruData storage/sharing Dropbox
MOBILE
Instant message WhatsappVOIP calling Skype, Google TalkIP TV Sky GoVoD YouTube, Vimeo
ILLEGALPeer to peer torrents Pirate Bay, Cyberlocker mega.co.nzAccess hacking Dreambox
Not to mention… security, pure back up, etc.
5% of messaging now on WhatsApp
25% of international voice minutes on Skype
Netflix users average 30 Gbytes per month and xbox
360 users taking 80 gigabytes*
Source Ventura Team LLP and *Sandvine
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 16 [email protected]
The OTT attack comes in many forms
TYPE OF SERVICE PLAYERS
LEGAL
FIXED
Live streamsCatch up TV BBC iPlayer, 4oD VOD (from pay-TV players)STB Virtualisation - TV on devices Sky Go VOD (subscription based) Netflix, New Sky serviceVOD free TED, Bloomberg, ivi.ruData storage/sharing Dropbox
MOBILE
Instant message WhatsappVOIP calling Skype, Google TalkIP TV Sky GoVoD Youtube, Vimeo
ILLEGALPeer to peer torrents Pirate Bay, Cyberlocker mega.co.nzAccess hacking Dreambox
Not to mention… security, pure back up, etc.
Nawras (mobile operator in Oman) saw $43 million of SMS
“Vaporised” in 2012 by WhatsApp
Ross Cormack - CEO
Source Ventura Team LLP and *Sandvine
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 17 [email protected]
Net neutrality under threat and unusual consequences
Free blocking Google ads (and being hit by the regulator)
Mobilink Pakistan
CAUSE: YouTube was blocked for blasphemous content.
EFFECT: Overall net was down from 2.3 Gig to 1.6 Gig.
UNEXPECTED CONSEQUENCE: YouTube is cached locally and users started searching for the same content from DailyMotion etc. – sites which are not cached
RESULT: Net traffic went up
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 18 [email protected]
So what can be done?
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 19 [email protected]
For media services
Minimise the impact of…Cord cutting – cancelling pay TV subscriptionCord shaving – reducing pay TV subscription
By…securing or maintaining access to premium contentbundling OTT with traditional pay-TV business models to ‘cover bases’
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 20 [email protected]
Create strategic partnerships to stay ahead of the competition
Vodafone + Facebook = 20% gain in data subscribers
3UK + Skype = lowered churn (as competitors such as Orange block Skype)
Google + Sprint = unique features (e.g. MMS) for Sprint users = more subscribers
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012 – Page 21 [email protected]
Virtualise the Set Top Box
Telecom Italia’s Cubovision will work on speeds as low as 1.5 MbpsRadically improves coverage potential
Note - Some territories don’t have the networks to support this type of service
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 22 [email protected]
If you can’t beat the OTT threat…
If you can’t beat them… join them3 in the UK working with Skype – balancing voice revenue decline on international versus
market share increaseIf you can’t beat them… stop them
The number of mobile operators blocking OTT services has almost doubled from 5.4% in 2011 to 10.5% in 2012, and the number of operators imposing surcharges has trebled from 5% to 15.8%*
In the long run – unlikely to workIf you can’t beat them… make them pay
Operators looking to provide CDN services (e.g. AT&T provide CDN’s for Facebook) but in 2011, 2% of fixed broadband customers used > 250 GB per month
Mobile operators can monetise the OTT challenge through data charges but the traditional cash cows of voice and SMS will decline
*Source Mobile Squared report
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 23 [email protected]
If you can’t beat the OTT threat…
However…with YouTube now uploading 72 hours of video each minute
Operators like dU thinking about monetising this…
http://blog.tagman.com
There is value for big content providers and retailers in localisation
Reducing page load time for ‘major’ sites such as Facebook by 2 seconds reduces lost page views by 16% = impact on customer satisfaction
Tagman researched impact of page load time on Glasses Direct conversion rate (right).
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2012– Page 24 [email protected]
Some operators actually are doing worse than they need to…
…Increase their paying subscribers by 9.8%?OR
Reduce their network usage by 9%?
How much do they need to pay for that?
All Rights Reserved - Copyright Ventura Team LLP 2008 - 2011 – Page 25 [email protected]
Operator Experience Includes:Telecom EgyptVodafone (various operations)Atheeb Consortium (Saudi)Millicom International CellularBatelcoColt CommunicationsBTSTCPipexRiksnetCable and WirelessEircomTurk TelekomBulgarian TelecomInvitel+PantelNeuf TelecomDeutsche TelekomMLL Telecom
Market ExperienceEgypt
Qatar
Oman
Saudi Arabia
Bahrain
UAE
Poland
Ireland
UK
German
Mali
Sweden
Hungary
Greece
France
Rwanda
Estonia
Thank you…
Richard Jones - Partner
[email protected] mobile: +44 7811 166033