OTT has become a key enabler of structural transformation in the industry

Although the cooperation with OTT may not be able to win the future, it is highly likely that OTT will be a scourge for floods and will most likely allow operators to lose their mess in the future because they use their valuable competitive resources in the wrong direction.

OTT has become a key enabler of structural transformation in the industry

According to the 2013 Ministry of Industry and Information Technology's communiqué of communications industry statistics, in 2013 the dependence of the industry on voice business continued to weaken, of which "non-speech revenue accounted for more than half of the first half, reaching 53.2%"; mobile data and Internet revenue The entire industry contributed 75.7% of revenue growth, up 24.7% from 51% in 2012.

In particular, mobile internet has become a key factor driving revenue growth. Data from January 2014 show that mobile Internet traffic continued to increase and accounted for more than 80% of mobile Internet traffic, with monthly mobile Internet access reaching 139.3 M.

We can see that in the five years after the 3G license was issued, the main force driving the transformation of the telecom industry was not the telecom operators themselves but the OTT vendors regarded as scary by telecom operators.

Especially in the past 2013, as one of China's mobile internet industry patterns and growth patterns have undergone a qualitative change in the past year, all OTT applications have migrated to mobile smart terminals and become the dominant force.

Also from the Ministry of Industry official data, the growth rate of mobile video reached 83.8%, top four applications driving mobile revenue growth, mobile instant messaging, mobile search, mobile video, and mobile online games.

In these four major areas, China's three major telecom operators have their own business layout, such as the field of video, China Mobile and video, China Telecom Tianyi video in the field of instant messaging, Fetion, easy to believe.

Operators own these businesses, whether in the user experience or business model, have different essences from the Internet OTT vendors, rely on the traditional KPI task-based promotion and package traffic subsidies, and essentially reduce the revenues of operators. .

Taking video as an example, the mobile phone video services of the three major operators are unbelievably successful in terms of client installation volume, which has become an important measure of business success rate.

According to the report of AiMedia, a third-party organization, in 2013, Youku Video, the distribution of China mobile video client usage, was temporarily ahead of its competitors with a market share of 20.1%. Aiqi followed 15.2% of users. Sohu video with the quarter, "China's good sound" hit attracted a large number of users, the performance of eye-catching, is currently in third place, accounting for 13.6%.

The video client as the mainstream video consumer model, the three major carriers of the client share almost negligible customers, can not but say that it is a market satire.

We can hardly imagine that if only the operator's mobile video, the structure of the development of the industry pull the effect of pulling what kind of situation?

So, for OTT, seemingly over-the-ball business, in fact, telecom operators should take the initiative to embrace, rather than as a scourge.

OTT biggest challenge to operators is not a product function, but a business model

According to research conducted by AI media, even video users have a very low willingness to pay directly. Users pay 24.5% in the third quarter of 2013, 2.9% of paying users over 50 yuan, and 10% of paid users -50 yuan proportion of users accounted for 8.5%.

Internet video application service providers, such as Youku and Ikki, whose primary business model is paying third-party advertisers, is their primary source of revenue.

After Maxthon browser launched 60 seconds ad fast-forward browser, was blocked from the major video sites, and eventually had to give up, we can see how important third-party paid advertising model.

Observe that the operator is a video content service, ads no trace, even in the PC side is also useless ads.

Telecom operators are different, the main revenue is to rely on direct billing to users. Then the challenge for telecom operators is that OTT vendors rely on a large amount of content to provide users with free services but operators are insisting on the principle of charging for these free content while telecom operators have no exclusive control over them content.

For users, the rational choice is of course OTT vendor services.

In fact, not just video, even if the carriers consider WeChat as the biggest scourge, WhatsApp, which has a strong alternative to OTT for basic voice and messaging services to telecom operators, is also a basic service for Internet vendors , Value added and derivative services charges.

Even in the value-added derivative services, WeChat does not all adopt a one-size-fits-all charging strategy.

Take WeChat as an example, the value-added service provides free facial expression service and fee-based facial expression services. The game relying on WeChat as an important entrance also has the free function of attracting players and the payment function of deep game player willing to pay .

At MWC Barcelona Telecom, regarded by global operators as a converged communications (RCS) capable of competing with WeChat, its public outreach also emphasizes the potential for competing OTT applications such as WeChat in business functions .

But the core question is: If the same function, the telecom operators to provide converged communications services, is not to charge it? If the charges, and the function of WeChat consistent, I am afraid that the user's rational choice will not be a fusion of communications products!

If free, then the more challenging question How can telecom operators reclaim the cost of huge converged communications network construction and terminal subsidies?

Whether China's operators or operators around the world focus their competition on services that provide the same capabilities as OTT applications, it is certainly a detour or a miscompetitive strategy.

The OTT's Alternative to Basic Carrier Services for Telecom Operators, Backed by Inability to Fight Back, Core to Internet Industry Features - Free Services to End-user Rigid Needs, Industrial Features in Telecom Industry - Charges to Rigid Needs of End-Users In essence, incompatible.

The result of this incompatible competition is obvious - it was a war that telcos could not win and was doomed from the start.

Pessimistic argument is that operators have to do, in addition to delay, the correct longer window period, I am afraid there is no more tactical choice.

The optimistic point is that the boom in OTT has become more and more important for carriers to return to pipeline services and provide a competitive network, providing opportunities for telcos to maximize the value of their networks.

Chinese operators need to face the reality of decentralization of industries

Under the tide of mobile Internet, the pattern of the entire ICT industry has evolved from the telecom operators as the center to the coexistence of multiple players such as mobile Internet giants, telecom operators, terminal manufacturers, traditional industry giants and virtual operators Multi-center pattern.

Each center has its own core competencies and builds its own ecosystem based on that.

Telecommunication operators need to return to the network-centric competition paradigm. The more prosperous the application of OTT, the more differentiated the competitive advantage of the network of telecommunication operator will be.

The assumption here is that ubiquitous network connectivity for all types of terminals is a central factor in the end-user experience and perception. As the basis for user experience, if there is no high-quality network services, I am afraid that the function of Hyun can only affect the temporary but not lasting.

However, in order to circumvent this problem, almost all OTT applications will inform users that the network quality is not good.

As time passes, this will affect the user's network choice. A recent example is the taxi driver's behavior on the taxi operator's choice of carrier.

Because taxi companies offer subsidies, the sensitivity of taxi drivers to tariffs has been greatly reduced, and the quality of network access to operators has become more and more sensitive.

That in many parts of Sichuan, Guangdong, Hebei, telecom operators are beginning to pay attention to the promotion of network quality in order to compete for the taxi user market.

I believe this is the beginning.

Conclusion: to give up fantasy need to correctly understand the different modes of living

OTT manufacturers and telecom operators have different survival and development modes. One relies on free competition and market choice to gain monopoly market status, and one relies on policy shelter and license monopoly for development opportunities. The key is that in the state-owned enterprises such as telecom operators, there is no explicit institutional incentive that enables OTT's business innovation to develop in unison.

So to give up the fantasy of competing with OTT, focus on competitive resources, return to the core value of the network, is not a bad choice.