Four Strategies Telecom Operators are following to...

Four Strategies Telecom Operators are following to compete in the OTT Video Arena

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2011 will be known as the year for Over-the-Top (OTT) TV in Europe. With the proliferation of Broadband, in almost every country one or more Video-on-demand (VoD) provider is offering paid streaming services over the Internet, modestly competing with the well established cable, satellite and IPTV platforms. But with a few exceptions aside, the adoption has been quite residual, mainly due to its limited content availability, but also due to its not-so-good user experience specifically because the lack of integration with the TV set. Due to the copyright limitations, most of the services are offered on a country basis, Although there is an exception to this as in 2011 we saw two larger streamers expand internationally, these being;

In order for OTT VoD services to be successful and reach mass-adoption during 2012, the following will need to be considered;

A large installed base of connected TVs (also known as Smart TVs) and devices such as video-consoles that simplifies the integration of the OTT video to the large screen, for example, Xbox integrating video services
End users expect every member of the family watching has his/hers preferred content delivered to their devices; be that a TV, computer, tablet or mobile. Most OTT VoD services do allow Multiscreen delivery. This is necessary in a multi-screen home.
Netflix - a leading OTT VoD service in the US has announced its service availability in different countries across Europe during 2012. This will increase the popularity of these services and competition.
A new European anti-piracy legislation with severe punishment will force users to move to legal paid services.

And, what are the challenges for the telecommunication service provider?

Head-to-head competition against its pay TV service (IPTV or cable TV). Canadian ISPs introduced monthly caps on data usage to protect its Video services and reduce the impact caused by OTT Video services.
Overall traffic increase with no additional revenue streams associated. A good example of that is what happened with the launch of iPlayer in the UK. Just a few months after the launch of the BBC’s iPlayer beta service, its traffic was about 5% of the overall Internet traffic, raising the debate on who should be paying for the required ISP networks upgrades. By February 2009, 1 in every 35 UK Internet visits went to a video website.

And if this is not enough, telecom service providers also experience:

ARPU declining, due to cancellations on TV service contracts
Risk of growing Churn rate due to lack of differentiation against other ISPs

In this landscape, it is not difficult to imagine that service providers will be looking for new strategies to compete on an even playing with this new foe, or convert it into a valuable ally, this would probably be the best strategy being the most cost effective.

From Juniper Networks I've been observing this situation and supporting service providers to identify the best solutions. I would like to list four key initiatives that the service provider communities are taking:

Use the same OTT technology to offer its video content, extending the reach to multiple devices. (Lime (Cable & Wireless Subsidiary) selects Juniper for Advanced Multi-Screen TV Services)
Generalise the usage-based contracts for broadband services. By limiting the monthly amount of downloadable data for the Internet, the end-user preference turns to service provider owned services. In certain markets it's not a very popular option so it will come with some additional advantages for the subscriber (price, bundles...)
Implementing transparent proxy technologies to cache the OTT content in the network and optimise the video delivery. Preferred option for ISPs with no TV services but also with a lot of interest for mobile networks. (BBC launches iPhone iPlayer app in the UK, adds 3G streaming to its mobile site)
Offer its own telco-content Delivery Network service to the OTTs to enhance the user experience. This opens new revenue streams and reduces the traffic.

Some of these initiatives are not necessary going to solve the problem(s), some of them will just help to reduce the amount of traffic and some of them can also impact negatively the ARPU/Churn rates.

With the growing interest on network programmability we foresee a Fifth strategy being formed… but this has been already discussed in a previous blog.

Juniper has solutions for all these initiatives listed above can be implemented with theUniversal Edge solution including QoS, service acceleration and scalability.

While you think on your action plan, I will leave you with a video with the highlights of the Multiscreen.

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Comments

Hi David Just read an interesting article in tonight's metro. It stated that Microsoft says that winning in VoD is all about using "the biggest screen in the house", I agree with this as the user experience on a tablet or mobile device is not quite as good as a large HD TV. So, I guess you could add the raise in sales of Internet connected/enabled TVs will facilitate change and demand from the consumer for increased Internet services. I'll scan a copy of the article for you tomorrow.