As more and more Communications Service Providers (CSPs) continue to transform their networks to all-IP, and more and more cellular networks are interconnecting with IP networks, attention is turning rapidly towards another trend: Digital Transformation.
The mass adoption of connected devices and applications is by definition disruptively transformational, as the thinnest, most portable smart phone is now becoming a device of choice for watching movies and even live events. We are connecting with other human beings while engaged in new activities like “binge watching” episodes of House of Cards in the US, or playing live games – with one player in China and another in Chile.
Given the fluidity of entertainment and communications, even our conversations – whether messaging, talking, or video conferencing – are more and more social, and given all these trends – we predict that the time has finally coming for CSPs and other real time communications companies to “cash in” with ad-sponsored and brand subsidized business models.
Example of an embedded ad sponsor for multiparty video conferencing
“Telecom” companies have been struggling for over twenty years trying to monetize their infrastructure investments. While SMS revenues, which held up the ROI for mobile networks during the first evolution (1G/2G), began falling, the explosion of data traffic helped replace those revenues. The traffic, however, also put enormous pressure on networks, driving the success of mobile offload technologies, making it possible to make a somewhat profitable business.
Example of a payments app embedded into a messaging experience
When the independent OTT challengers (Facebook, WhatsApp, Twitter, Viber, NetFlix, Spotify, I Heart Radio and more) started to drive more and more bandwidth requirements, CSPs had no choice but to keep investing in infrastructure to keep their subscribers happy, even while they heard the “sucking sound” of loss of not only SMS, but VoIP minutes.
Example of a sticker embedded into a messaging experience
Global CSPs revenues are still stagnating, but there is light at the end of the tunnel when they make moves to participate more vibrantly in the multimedia messaging world, with assets they have that the challengers could never dream of, including their embedded base which numbers in the billions, collectively.
Where CSPs now have a huge opportunity to make new revenues? Advertising including marketing, e-commerce, and more. This is an age-old story, in some respects. CSPs have tried this in the past, and have failed. They have not been able to create “Google Search” and “Mobile Search” platforms work, but now what’s different? The user experience.
Ten years ago a consumer may not have been willing to listen to a 5 second ad in exchange for a free phone call (“brought to you by Pepsi”), or wait to view a 5 second display ad while waiting for a multimedia message to display (“brought to you by Coca Cola”).
But now – with these experiences becoming more common on YouTube, and with more people watching on mobile devices than traditional “TV Sets,” – the world has been conditioned to accept being “advertised to” in exchange for getting free stuff.
CPS are now starting to adopt aggressive digitization strategies, although the process has been anything but painless. OTT changes this. OTT experiences are by definition more visual, more fun, more entertaining and they are “web services” at heart. Having a video chat with friends? Why not agree to start that call with a short ad for a concert that has been targeted (by software in the cloud) to appeal to that very group of teenagers?
Providing international voice calls between the US and Philippines? Why not allow a travel company to offer discounted airline fares and hotel rooms for people who may be traveling to Manilla? Isn’t that a service now, and not a nuisance?
Example of a travel offer extended to a targeted “ex-pat” community
CSPs with vision understand the potential benefits — more consumer satisfaction, enhanced revenue streams, and at last, monetization to offset massive investments in networks that can be reaped by providing awesome online digital experiences.
One of the most exciting things about fring and the fring Alliance? We are able to bring together the coolest CSPs in the world to talk about figuring this out as a community, no longer willing to cede another wave of revenue creation and profitability to the challengers.
There is no turning back. We will continue to live in an ever more connected world. The question is – what side of history will you be on? New business models take innovation, action and courage. But when our real time communications industry embarks on innovations together, risk is reduced – and the rewards?