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European MNOs missing out on €2.2bn

By Sean Jackson for Telco-OTT Today | October 6, 2014

Western European operators are potentially missing out on more than €2 billion in gross profits according to independent research commissioned by AsiaInfo – China’s largest telecommunications software and services company. Undertaken by consultancy firm Northstream, the research highlights that an open platform approach to collaborating with the OTT community could unlock significant revenues as well as slash related operational costs.

Northstream’s investigation concentrated on 60 operators across 16 Western European countries.  The research identified that the current individual, essentially manual, approach to OTT collaboration normally undertaken on a case-by-case basis can be expected to generate a modest gross profit of around €160 million over the next three years.

However, an approach based on deploying an open collaboration platform, providing OTT partners with direct but controlled access to the operator’s IT assets coupled with the possibility to leverage end-user context, would not only substantially reduce operating costs per partnership, it would also enable operators to add more partners, deliver more value and increase revenues from each collaboration.  The net result is an eye-catching 15-fold increase in gross profits to €2.2 billion across the 16 countries.

Commenting on the research findings, AsiaInfo’s VP of product marketing Dr Andy Tiller said: “This is a huge wake-up call. We know from earlier research that 90 per cent of operators recognise the need to partner with the OTT community, but many are still sceptical about the business case – particularly the costs involved and the revenue return.  What this new research from Northstream shows is that deploying an open collaboration platform can unlock a net revenue stream that is far bigger and more profitable than many had imagined.”

Northstream’s research identified three key drivers to profitability: a collaboration platform enables operators to grow the numbers of partners, increase the variety of partnership scenarios, and boost subscriber take-up of partner-based offers.

“It is quite simple,” said Northstream’s CEO, Bengt Nordström. “Our modelling shows that the potential lies in the operators’ ability to achieve the economies of scale required and quickly add and manage partnerships across those three growth criteria.  As long as a manual or case-by-case model is adopted costs remain high and growth remains limited.

“However, it is not just about the automation,” he added.  “It is also about speed of introduction and the appeal of partner-based offers to end subscribers, as well as the commercial attractiveness of the partnership to the OTT community.  Those operators that adopt an open platform approach will attract more partners and deliver faster returns and greater profits to both parties.”

The potential shown through the study suggests the need for a mind set adjustment from operators, away from purely marketing relationships towards innovative direct revenue-generating partnerships enabled by open collaboration platforms.

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