Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.”
Jeff Bezos

In yesterday’s blog, we cited a report indicating that CSPs across the globe could lose up to $172 Billion in revenues from voice and messaging services.

The implication is that OTT (Over the Top) providers are responsible for this decrease. The OTT players are definitely a threat to the CSPs, but for some reason they’re not always seen as competitors by the CSPs.

In the distant and profitable past for the CSPs, significant revenues were derived from their voice-based cash cows. Subscribers were creating their own content so the CSPs held the entire share of wallet for communications services via the provision of the communications connections (eg the phone lines) and the content generation devices (eg the fixed-line telephone).

But we’re seeing an increasing shift from voice-based services to data-based services, even if voice is carried across these data connections. With this shift we’re seeing the share of wallet numbers change. Subscribers are paying a premium (largely to OTT providers) to consume content (eg online betting) and for content generation services (eg Skype) rather than the network connections. The primary component of wallet share remaining with the CSPs tends to be the provision of communication connections (eg data services), but that’s commoditising. [Note: albeit with ISPs taking some of the comms link market share from the traditional carriers]

The end-to-end ecosystem still remains as dependent upon each element as it always did, but the CSPs have lost share of wallet to disruptive innovation. Nonetheless, content providers and content generation tools still rely on the CSPs to provide comms links and increased content leads to the purchase of fatter pipes (and bigger revenues), so the OTT players can still be seen as partners as well as competitors.

Perhaps the CSPs need to look more closely at how they can generate more revenues from the provision of data, not just links. This is where innovative services such as OSSaaS (OSS as a service), RTAaaS (Real-Time Analytics as a service), private clouds with social media plus data mining (eg social media with innovation analytics) and many others become possible content-based revenue generators for the CSPs.

In what ways can the CSPs derive increased revenues from the masses of data that a) they collect / store and b) passes through their networks every day? Who are the organisations that are prepared to pay well for unique and valuable data? I’d love to hear your thoughts!

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