The diagram above comes from research by AT Kearney and Delta Partners courtesy of an article by Mark Newman of TM Forum.
It provides an interesting perspective on CSPs’ ability to “compete” with a broader, more digitally native group of service providers.
The golden age for CSPs was when they transported data from point A to point B (ie data and voice services) and people performed the value-add on top of those communications (ie business development, marketing, etc). DSPs have disrupted this model by now providing the value-added as digital services on top of base comms services (ie the over-the-top play).
The breadth of OTT services means that CSPs can’t possibly create the whole long tail of offerings. However, like DoCoMo, they can create partnerships and/or platforms that support the long tail of third-party offerings. It’s no coincidence that DoCoMo is the clear leader in the graph above as they have a long history of deriving revenues from third-party partnerships.
The question for an industry where 3.8% of revenues are from digital sources is not so much how to transition to an OTT model themselves, but how to provide digital delivery platforms that support third-party revenue streams and to do so more profitably (for all parts of the supply chain).