Connectivity is the mainstay of telecom operators. However, with the rise of digitalization, IP networks across the globe have become much more than just data-transporting pipes. Connectivity is now a strategic asset, with players from outside the industry, namely media, content and cable, encroaching into what used to be operators’ exclusive playground.
In the UK, for example, cable operator SKY started rolling out broadband connectivity to its cable subscribers to boost the take-up of its SKY TV service, enabled by technologies such as DOCSIS 3.1. The implication of this to established broadband operators such as BT and Vodafone was obvious – their share of the broadband market suddenly needed to be shared.
This, however, is yet to be the biggest threat to the telecom industry. The surge in over-the-top (OTT) offerings by new digital players who are apt at combining a few thousand lines of codes to provide services that rivalled operators’ staple offerings, namely voice call and messaging applications, created a massive shake-up within the telecom space. Telecom operators witnessed a mass exodus as subscribers abandoned native voice and SMS services in favor of the free, feature-rich, popular OTT messaging and call apps such as Whatsapp, WeChat, Snapchat and Facebook Messenger. The loss was incalculable.
It became clear to telecom operators that to stay relevant and to be sustainable in the long run, they had to emulate what rivals outside the industry were doing, but in reverse – foraying into the content business. This spans a long list of popular digital content namely video-on-demand, TV, news and media, music streaming and sports, followed by lighter content such as chat and messaging applications, e-magazines and specialized content such as e-education and e-health.
While some operators acquired a stake in existing content providers, as in the case of Kabel Deutschland that was acquired by the Vodafone group, most others started building their own content portfolios. One of the most popular strategy towards this end is the bundling strategy. The goal is to lure subscribers to increase their data take-up with content add-ons. There are plenty of examples of this in the industry. Reliance Jio bundles its JioFiber data plans with subscriptions to OTT platforms such as Disney Hotstar, ZEE5 as well as subscriptions to its own OTT video and music platforms, Jio Cinema and Jio Saavn1. EE also offers a similar add-on, EE Video Data Pass, which for £8.99 a month, allows subscribers to stream Netflix, Amazon Prime, BT Sport etc. without it counting towards their monthly data allowance2.
Others adopt a standalone strategy, where they spin off dedicated brands with content offerings that are available for both subscribers and non-subscribers. The idea is to grow and develop a fully-fledged content business. Examples of this are GoWATCH, a content and data bundle by Globe Telecom that provides access to Netflix, iFlix and Youtube3, and AT&T’s HBO Max, acquired via Time Warner4.
As telecom operators forayed into the content business, stories started to emerge - some of instant successes, some of immediate failures. There were stories of massive rebounds, and then there were stories of slow deaths. All stories, however, point to the same conclusion – operators who could accurately predict their customer behavior in terms of their content, commitment and usage preferences, had an edge against everyone else, including rivals outside the industry. For us at Rohde and Schwarz ipoque, this is not a surprising find. We have long worked with telecom operators and our experience shows how a deep understanding of network and subscriber behavior is able to make or break any product proposition.
In this regard, our Deep Packet Inspection (DPI) engine R&S®PACE 2 has been widely used to understand network, subscriber and content patterns. R&S®PACE 2 is able to classify IP traffic based on protocols and applications, allowing it to identify in real time not just the application that is being consumed, but also the total bytes of data, the device, the duration, the application attribute, the user and the plan.
The implication of such analytics provided in real time, for telecom content business, cannot be overemphasized. Content business strategies will only work if the offered content is in demand. Offering a globally popular, branded video-on-demand service, for example, may result in massive losses to the business if locally produced, light content that can be sourced cost-effectively is preferred in the local market. Huge outlays in content partnership agreements have cost telecom operators millions of dollars of non-recoverable expenditures simply because operators have failed to gather accurate insights on their subscribers’ content preferences.
Apart from selecting the right content, instituting the right types of plan also hinges on understanding data consumption patterns. Zero-rated content bundles on mobile plans, for example, can only be successful if the operator can accurately predict the cost to the network of delivering terabytes of video content on a daily basis. Telecom operators with better insights will be able to work out network rules that manage fair-usage policies where tethering or unauthorized plan sharing is identified via DPI in real time and managed via throttled speeds. Our R&S®PACE 2 in this case, identifies the types of devices, users and application usage that is used across the plan and provides insights that can be used to develop premiums for heavy users.
When it comes to content, R&S®PACE 2 helps telecom operators improve existing network capacity by identifying content that requires optimization and caching, both of which significantly reduce the consumption of network resources in terms of computing power and bandwidth, while enhancing user experience. Dynamic provisioning of network policies on selected content requires not just content insights, but also overall and localized network performance data such as speeds, latency and throughput, so that traffic prioritization can be implemented to ensure that operator content plans are delivered at the expected SLAs, while normal Internet traffic goes through standard routing.
For telecom operators, content business is not just about making or buying content and then selling it for a profit. It is about standing up to the competition from an emerging breed of aggressive outsiders, about retaining customers and luring new ones, and sustaining profitability in the long run. In this regard, even a simple chat application developed by the operator requires insights on what would make subscribers switch from the likes of Whatsapp to the likes of BiP5, the hugely popular messaging app by Turkcell. This is where deploying tools such as R&S®PACE 2 to study application usage patterns enables operators to include rich features such as online money transfers and flight check-ins, to entice subscribers.
In the content world, borrowed strategies rarely work because no two markets are the same and no two operators are endowed with similar resources. Almost all telecom operators with glaring success stories have crafted their bestselling content strategies from scratch, using tools that are able to mine and manage all the data that traverses their networks, day and night, so that operators can continue selling good content and keep their subscribers coming back for more.
1 Reliance Jio - https://www.jio.com/fiber/en-i...
2 EE - https://ee.co.uk/help/help-new...
3 Globe Telecom - https://www.globe.com.ph/prepa...
4 AT&T - https://www.att.com/hbo-max/
5 Business Wire - https://www.businesswire.com/n...
John Bonzey is the sales manager for the American market, which he opened successfully for ipoque since joining Rohde & Schwarz back in 2013. John has strong expertise in software and hardware system solutions for network operators, enterprise and OEM market segments. John lives with his family in Boston, Massachusetts and is a passionate ice hockey player and adventurous snowmobiler.
Email: John.Bonzey@rsa.rohde-schwarz.com
