Digital (dis)content

4 min read Networks & Network Services

Digital (dis)content

Clarity Kalcina
Clarity Kalcina

Tony Kalcina, chief product officer at Clarity, discusses how new models for digital content distribution are changing everything.

The telecoms industry is no stranger to change, but the last decade has seen an unprecedented revolution in the content delivery ecosystem. This rapid pace of change is forcing communications service providers (CSPs) of every creed to adjust their business models and look further than traditional voice and data services.

Networks have now evolved to the point where they can cope with bandwidth hungry content, applications and cloud services. Already CSPs are facing tough competition from a new breed of companies exploiting the opportunity to monetise digital content delivery.


Nicking the network

Internet giants like Apple and Google have successfully established delivery platforms that utilise a CSP’s core commodity – its network – without sharing revenue for the privilege. YouTube and iTunes are able to generate enviable revenues from their services via advertising or pay-per-download, while locking CSPs out from sharing in these lucrative revenue streams.

The increasing popularity of these services, alongside cloud computing and virtualisation, is also putting immense pressure on operators to upgrade and expand their networks to support the high bandwidth traffic they generate.

CSPs now face the very real prospect of becoming little more than data pipes and, in order to avoid this fate, they must totally reinvent the way they generate revenue. The traditional model of building a network and charging for the applications that run on top of it is no longer viable.

It’s imperative for CSPs to implement models that allow them to profit from the network upgrades they’re rolling out to support next generation network (NGN) services. With growing consumer demand for video on demand, VoIP, IPTV and location-based services, the opportunities are there. The potential ARPUs from such services can be significant; Heavy Reading has estimated that the ARPU from IPTV services alone equates to around $45 in the US and €30 in Europe.

Rolling out systems that allow CSPs to brand and bundle NGN services will be essential to allowing them to differentiate themselves in an increasingly competitive landscape. These services hold the key to not only raising subscriber ARPU, but also to attracting new customers, maintaining the loyalty of existing subscribers and reducing churn.


Rock and hard place

If CSPs fail to take advantage of the revenue potential of these services, they may soon find themselves trapped between falling ARPUs from traditional services and increasing expenditure on developing and maintaining network infrastructure.

However, CSPs need to be ready to meet demand and deliver NGN services anytime, anywhere, with any device. Customers do not want to have to choose between different services; they want to be able to organise multiple levels of access for all their services simultaneously.

To meet these needs, CSPs should look to develop unified catalogues, which can manage the breadth of their own product range, as well as products from third parties. The unified catalogue supports the customer desire to be able to select the products and services they want, rather than having products in multiple catalogues that prevent dynamic bundling into tailored packages.

By breaking down silos and supporting horizontal layers of common intelligence, it is possible to build highly integrated, yet flexible systems. Meanwhile the opening up of IT-oriented gateways and open interfaces will make it possible to extract value and introduce new partners into the value chain.

For example, content producers and CSPs - natural allies in the hunt for premium revenue share – can create mutually beneficial business models based on shared value chains. Such models will enable content producers to improve their status in the ecosystem whilst allowing CSPs to profit from the traffic generated on their networks.


Not just a pretty face

In this scenario it’s important to recognise that CSPs are not just valuable for their networks, but also the fact that they can enter this value chain as trusted suppliers, leveraging their existing customer relationships, subscriber knowledge and service quality assurance capabilities.

It is crucial, however, that CSPs establish themselves as a supportive partner to the entertainment industry, helping them to bring their content to market as quickly and as cost-effectively as possible. The easier it is for customers to access products, the more willing they may be prepared to pay for it.

Customers will also be attracted to a business model that does not lock them in so tightly to a specific handset or device, one of the obvious bugbears in today’s content solutions. This can be achieved by offering ‘plug and play’ delivery platforms, which include automated processes to control every element of the customer experience, from ordering and provisioning to service assurance and billing. Flexible product catalogues will also be needed so that content producers can add any type of product or service to their platform, managed by intuitive and repeatable processes.

Not only does this give content producers the ability to manage their own distribution system and product catalogue without technical expertise, it also reduces much of the investment required to develop these platforms independently.

The key for CSPs is that automated processes would also enforce any financial agreements between themselves and content providers, which will need the flexibility to be based on different charging models, such as data usage (for low value content) and revenue sharing (for premium content).

There is a short window of opportunity for CSPs and content producers to forge these relationships as non-traditional competitors have already made headway into data-intensive content distribution. While the music industry was guilty of failing to anticipate consumer behaviour and not reacting quickly enough once this had become apparent, there has been ample time for other industries to avoid meeting the same fate.

Meanwhile, CSPs need to prove that they are the logical partner for new distribution platforms and demonstrate how they can provide the support, tools and business case that will ensure their success.

Clarity enables its customers to simplify their operations with an integrated, modular solution to optimise and automate core operational processes to manage network build and movements, develop and sell next generation products, and deliver and assure the quality of customer services. http://www.clarity.com/