Digicel has found a new way to tackle the OTTs

25 Nov 2016

Julio Alvarez and Mandy Kruger from Digicel at the recent GSMA WAS summit in Dublin. Image: Luke Maxwell

Mobile operators need to fight internet OTTs based on value as well as features, said senior Digicel executives at the recent GSMA WAS summit in Dublin.

More than 1,200 senior executives from mobile giants including AT&T, Verizon, Vodafone, Hutchison and China Mobile attended the GSMA Wholesale Agreements and Solutions Group (WAS#4) summit, which previously took place in Asia and Europe.

The event was hosted at the Convention Centre in Dublin by local mobile software player Anam.

Billing and future revenue streams were the order of the day.

But rather than struggling with over-the-top companies (OTTs) such as Facebook and WhatsApp, operators like Digicel are finding new ways to fight back.

Digicel is a mobile operator founded by Denis O’Brien in 2001, which is now active in 33 markets across the Caribbean, Central America and Oceania regions. The network has about 13m wireless users.

It is the telecoms controversy of our time: mobile network operators build and grow networks but then OTT players like Facebook, Viber and WhatsApp build next-generation communications services that run over these networks and give them to consumers for free.

While this may lead to increased data consumption, operators are railing against the suggestion that their networks are, in effect, just dumb pipes.

Worse still, OTTs are essentially becoming quasi-telcos that are making billions in advertising, without having built any of the infrastructure.

Last year, we reported that Digicel was also partnering with Shine to block advertising from Facebook and Google on its network.

However, in Europe, such moves may not be possible. The Body of European Regulators for Electronic Communication issued new net neutrality guidelines that suggest that although consumers can install ad blocking apps on their phones, network-level ad blocking should be prohibited.

At the Dublin GSMA WAS summit, Digicel’s Julio Alvarez and Mandy Kruger revealed a new approach to tackling OTTs that is more about cooperation rather than defence.

“We are looking to monetise differently through transactions and be able to grow a network for customers based on value that the customers see, and be able to provide that infrastructure,” Alvarez said.

Driving the digital future

Alvarez said that net neutrality is at the heart of the matter.

“A lot of revenues are being lost and at the same time, we have to grow capacity because there is more and more desire for high-speed data.”

He said that the onset of OTTs providing services that mimic mobile operators’ voice and messaging services hinders operators’ ability to monetise and provide value.

Kruger said that the best way for mobile operators to fight back is to become more and more customer-centric.

“We can do this by looking at what customers are using, looking at the big data, the usage patterns, and then working with OTT players and partners to help drive the customer engagement and usage.”

Rather than trying to hold back OTTs, Alvarez said that mobile telcos now need to find ways to work with them.

“If you fight that wave and the value that customers see in that, you will have customers that aren’t happy, so we have to look at monetising separately.”

But there are other ramifications of OTTs.

Alvarez said that in Haiti, where local usage is low because it is a poor country, the value of calls coming in helped subsidise handsets for the population.

But now because of OTTs, even that revenue is gone. “The core challenge with OTTs is finding ways to monetise and still provide value for the customer.”

The answer could be technology, said Kruger. “Operators are going into this disruptive phase and moving from being a regular operator to being a total communications and entertainment services provider.”

She cited new services such as Digicel Play, the operator’s fibre TV platform, and a willingness to work with OTTs rather than fight them, as the key to the future.

“We are working with everyone as a whole to drive the future,” Kruger said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years