Why sleeping with the 'enemy' may not be such a bad idea
08 Dec 2016
Why sleeping with the 'enemy' may not be such a bad idea
According to a recent Heavy Reading survey of telecom executives, 36 percent chose Google as the best partner for telcos, followed by Amazon (23 percent), Microsoft (12 percent) and Facebook (10 percent). But about two thirds also identified Google as the biggest threat.
Indeed, webscale over-the-top providers are a threat. Consider these sobering statistics: About 20 billion SMS messages are sent across mobile operators’ networks worldwide each day, but Facebook and WhatsApp, alone, process about 60 billion per day. Maybe that’s why only 10 percent of telcos see Facebook as a good partner.
The threat from Google may not seem as imminent now that the company has backed away from its Google Fiber project, but telcos are still concerned, and rightly so. About a quarter of the respondents to Heavy Reading’s survey said they think a webscale company like Google will eventually buy a network operator.
"I think it is highly likely," said Patrick Donegan, Chief Analyst, Heavy Reading during a presentation of the survey results at Light Reading's Executive Summit this week in Rome. He speculated that Amazon or Google could purchase a company like Zayo, a data center and fiber operator in North America and Europe.
Despite the threat, many telcos are partnering with OTT players. Consulting company Detecon, a TM Forum member, has been studying partnerships between the two.
Telefónica UK is partnering with Amazon Web services to deliver its new O2 Drive service, which helps the company’s mobile customers get better insurance rates for good driving. The service, which is sold through a direct website as well as through online insurance aggregator sites in the UK, is provided in partnership with BGL Group, a UK-based insurance broker, but from the customer’s perspective, O2 is the insurance provider.
Telefónica UK used TM Forum’s Open Digital Ecosystem to develop the platform, in particular the B2B2X Partnering Guide, the Digital Services Reference Architecture (DSRA) and Open APIs. By using the APIs, the company will be able to easily integrate with other OTT providers in the future.
Going with AWS allowed the company to get up and running in just six months. “We’re the first platform in O2 to build with an elastic model,” said Stephen Devereux, Head of Digital Products, Innovation & Insight, Telefónica UK. “We know we can scale very quickly, practically on demand. As a result we are now looking to move many of our other services to AWS, which for a telco is a major shift.”
AT&T also announced in October that the company is expanding its partnership with AWS to develop joint cloud, Internet of Things (IoT) and security solutions for enterprise customers by combining AT&T’s network with the AWS cloud.
According to AT&T, the collaboration will focus in three main business areas, with potential expansion in the future:
Other recent partnerships include deals between Orange and Google; Liberty Global and Twitter; and Ericsson and Google. The bottom line is that telcos are realizing they can sell more connectivity services, improve customer experience and generate additional revenue by partnering with their rivals.
They add: “Cultural differences between both parties as well as the readiness to partner can effectively destroy any value the proposition might have generated. It took some operators two years or more to integrate OTT partners into their processes and systems. With the rapid changes in the OTT economies (who would have predicted another Pokémon craze 6 months ago?), any integration that takes more than 6 months is limiting a partnership’s potential drastically.”
TM Forum offers many tools to help network operators integrate partners, including OTT providers, into digital ecosystems, and we are working on a Digital Platform Reference Architecture to help operators turn their own platform infrastructure inside out in order to enable platform business models. Next month, we will publish an ebook outlining the work we’ve done so far, so watch this space.
Indeed, webscale over-the-top providers are a threat. Consider these sobering statistics: About 20 billion SMS messages are sent across mobile operators’ networks worldwide each day, but Facebook and WhatsApp, alone, process about 60 billion per day. Maybe that’s why only 10 percent of telcos see Facebook as a good partner.
The threat from Google may not seem as imminent now that the company has backed away from its Google Fiber project, but telcos are still concerned, and rightly so. About a quarter of the respondents to Heavy Reading’s survey said they think a webscale company like Google will eventually buy a network operator.
"I think it is highly likely," said Patrick Donegan, Chief Analyst, Heavy Reading during a presentation of the survey results at Light Reading's Executive Summit this week in Rome. He speculated that Amazon or Google could purchase a company like Zayo, a data center and fiber operator in North America and Europe.
Partnerships on the rise
Despite the threat, many telcos are partnering with OTT players. Consulting company Detecon, a TM Forum member, has been studying partnerships between the two.
“There are a few ways in which a telco can respond to this threat: ignore it; try to create competing in-house services; or partner up,” write Klaus Newen, Riem Silvia Jalajel and Alexander Hardt in a recent blog. “Out of 720 OTT/Telco partnerships in the past five years, 327 have been announced in 2015.”
Telefónica UK is partnering with Amazon Web services to deliver its new O2 Drive service, which helps the company’s mobile customers get better insurance rates for good driving. The service, which is sold through a direct website as well as through online insurance aggregator sites in the UK, is provided in partnership with BGL Group, a UK-based insurance broker, but from the customer’s perspective, O2 is the insurance provider.
Telefónica UK used TM Forum’s Open Digital Ecosystem to develop the platform, in particular the B2B2X Partnering Guide, the Digital Services Reference Architecture (DSRA) and Open APIs. By using the APIs, the company will be able to easily integrate with other OTT providers in the future.
Going with AWS allowed the company to get up and running in just six months. “We’re the first platform in O2 to build with an elastic model,” said Stephen Devereux, Head of Digital Products, Innovation & Insight, Telefónica UK. “We know we can scale very quickly, practically on demand. As a result we are now looking to move many of our other services to AWS, which for a telco is a major shift.”
AT&T expands AWS partnership
AT&T also announced in October that the company is expanding its partnership with AWS to develop joint cloud, Internet of Things (IoT) and security solutions for enterprise customers by combining AT&T’s network with the AWS cloud.
According to AT&T, the collaboration will focus in three main business areas, with potential expansion in the future:
- Business cloud networking: AWS was already part of AT&T’s NetBond, cloud connection service. In the last year, the NetBond ecosystem has seen four-fold growth in connections and eight-fold growth in traffic. Now AT&T and AWS will work together to identify new solutions with security, performance, and mobility in mind. Emphasis will be placed on enhancing end-to-end customer visibility across more highly secure and high performing network connections, allowing for faster and more automated decision making capabilities to the customer.
- IoT: AT&T and AWS will coordinate introduction of AT&T IoT-connected sensors and devices preconfigured to seamlessly and more securely send data into the AWS Cloud. It brings together AT&T’s global network, which connects nearly 29 million connected devices as of 2Q 2016 and reaches over 200 countries and territories, with AWS IoT, a managed cloud platform that can more securely and reliably scale to billions of devices and trillions of messages.
- Threat management:As part of the expanded strategic relationship, AT&T and AWS plan to use threat data and knowledge from both organizations to develop processes and tools for AT&T’s Threat Intellect, which AT&T calls “the brains” behind its security platform.
Other recent partnerships include deals between Orange and Google; Liberty Global and Twitter; and Ericsson and Google. The bottom line is that telcos are realizing they can sell more connectivity services, improve customer experience and generate additional revenue by partnering with their rivals.
Common denominators for success
“In our projects, we started to notice common denominators for successful partnerships,” write Newen, Jalajel and Hardt. “Based on our experience in the telco sector and the in-depth analyses we conducted, we developed the OTT Partnering Success Formula. Whereas utility and customer experience are the key factors for achieving an OTT partnering success, the denominator’s factors, culture and processes, can hamper a partnership from becoming successful.”
They add: “Cultural differences between both parties as well as the readiness to partner can effectively destroy any value the proposition might have generated. It took some operators two years or more to integrate OTT partners into their processes and systems. With the rapid changes in the OTT economies (who would have predicted another Pokémon craze 6 months ago?), any integration that takes more than 6 months is limiting a partnership’s potential drastically.”
TM Forum offers many tools to help network operators integrate partners, including OTT providers, into digital ecosystems, and we are working on a Digital Platform Reference Architecture to help operators turn their own platform infrastructure inside out in order to enable platform business models. Next month, we will publish an ebook outlining the work we’ve done so far, so watch this space.
