|By Esmeralda Swartz||
|February 27, 2014 03:21 PM EST||
In this first update from GSMA Mobile World Congress, which kicked off in Barcelona this week, we take a look at some keynotes from the day one. They turned out to be interesting and thought provoking, something that is not always guaranteed at these events. Here are some quick observations from the MetraTech team on the ground in Barcelona.
A series of presentations from telecom carriers Kakao, Millicom, Tele2, and Vimpelcom covered some varying ground, but shared one interesting common notion- that telecom carriers should understand that working with so-called over-the-top service providers will prove to be better business than fighting with them.
The idea is that edge providers have huge potential for revenue generation and that by working with them to ensure that their shared customers get the kind of service they demand, there will be opportunities for the carriers to share in the upside.
Sirgoo Lee of Kakao described the way his company has proactively nurtured partnerships with gaming and app developers and worked with them to help them establish a commercial presence online in return for a share of revenue. One app, developed in this way won 10 million customers in its first nine days and now has 55 million users. Altogether Kakao's partnerships arrangements have generated around a billion dollars in revenue, shared among Kakao and its partners.
Here are some more quotes from this series of keynotes. Millicom: "We believe you can't stop Facebook and the others. We will partner with them." Tele2: "I don't care what you do with your services ... Netflix, whatever, it's all good for me because I own the pipe." Vimpelcom: "We were among the first to partner with the OTT guys. There is enough growth for everyone. It's about partnering."
This might seem an oddly un-businesslike attitude to some US-based carriers who have been working on the assumption that third party edge-providers are a bit of a nuisance, and need to be kept in their place.
Coincidentally, a significant milestone in the opposite direction is in the news this weekend in the US. It seems that Netflix has agreed to the demands from Verizon and Comcast for extra payments to ensure that those companies deliver the Netflix bits more or less complete and in the right order. This is historical because it is the first success in the carrier's campaign to extract payments from everyone along the content value change.
The interesting thing is that these apparently conflicting approaches may in fact be headed for the same vision: an environment in which some of the revenues from content sold and delivered trickles down from the content suppliers to all the bit-carriers en route to the customers.
However the approach described repeatedly in Barcelona today emphasized collaboration, partnership and mutual benefit. The conventional carrier wisdom in the US is based on confrontation and extracting tolls.
In side conversations at the event, it becomes easier to understand the motivation behind the ‘softer' approach. For not-so-big carriers in evolving and competitive markets, strong-arm tactics are seen as dangerous. The last thing those carriers want is for edge providers with lots of cash in the bank to get uppity and start building their own access networks.
In the US, on the other hand, carriers obviously feel very secure in their position as monopolistic or duopolistic access providers. It would just cost too much for an edge provider to build out the infrastructure needed to compete. A company like Google, for example would never spend that kind of money.
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