PCCW Global has been an active player in the media and broadcast industry worldwide for more than four decades. It has innovated in areas such as the global delivery of 4K ultra high definition (UHD) video, launching over-the-top (OTT) video services in emerging markets and the company is now offering service providers a modular platform which enables them to manage, deliver and monetize digital video content themselves. The new Global Media Video Platform builds on PCCW Global’s years of experience in media and broadcasting as well as its core wholesale strengths and DNA.

Lindsay Servian (LS), Head of ONTAPtv.com at PCCW Global spoke with Mike van den Bergh (MvdB), Chief Marketing Officer about the reasons for launching the platform, and the opportunity that video presents for service providers keen to move beyond legacy revenue streams.

LS: We’ve seen a lot of changes in the media and communications market over the last 10 years and these changes are starting to be reflected in service provider businesses. Why is OTT video an opportunity for service providers and why is it important that they take the opportunity seriously?

MvdB: I think there’s been a real wake-up call over the last two to three years. Service providers have seen revenue from their traditional services plateau, and the new OTT players have been a real factor in these developments. The emergence of pure-play OTT services has had, and will continue to have, a significant impact on the traditional voice, IDD and SMS businesses for service providers and mobile operators.

In addition, the shift in viewing habits to video on-demand is generating significant data traffic on their networks. Video now accounts for more than 70% of the total data traffic on most networks today. Although service providers benefit from the uplift in data revenues as a result of OTT video services, they lose out on the actual service revenue and are constantly needing to pay for network upgrades in order to cope with the increasing traffic volumes.

LS: The mobile operators need a better way to monetize the OTT video traffic going through their network. The ‘wait-and-see’ approach is no longer viable and they have to take action.

MvdB: Service providers have several options in this new paradigm. They can try to limit the data traffic or quality of service for specific pure-play OTT services in order to degrade the quality of these services, thereby trying to reduce the impact on their traditional businesses. However, this will affect customer satisfaction and customers may switch to other mobile operators with better support for OTT services. Regulators are also unlikely to be tolerant of these tactics.

Alternatively, they can enter into a revenue sharing deal with the pure-play OTT players to provide a better QoS for their OTT services. This is the first step that a number of service providers have taken to recoup some of the cost of incremental data traffic. However, this approach dilutes the brand of the mobile operators and weakens their position in revenue sharing negotiations with the pure-play OTT players.

LS: It looks like service providers need to make some tough decisions but none of those options look great in the long-term. There has to be a better approach than these options.

MvdB: Service providers can build their own branded OTT video services to strengthen their branding, bundle their data offerings, increase ARPU with higher data consumption and move up the value chain to tap into new revenue streams from the rapidly growing OTT services.

LS: In the case of ONTAPtv.com, we’ve looked at how we can disrupt the video on demand (VOD) market in South Africa and capture new revenue from OTT video, like you say. The South African market really hasn’t had premium content at affordable prices and we looked how we could leverage the experience and media expertise we have in our home market of Hong Kong to deliver a tailored OTT video platform for the local market. ONTAPtv.com is the result of a robust platform combined with local market knowledge.

MvdB: I think that is where the long-term opportunity lies. Service providers can adopt a full end-to-end OTT video managed service that is white labelled for their subscribers. They get the benefit of moving up the value chain to capture new revenue from OTT video while still owning the customer relationship. At the same time, the local provider is able to tailor their OTT video offering and customize it to local market conditions.

LS: In South Africa, we’ve adapted the service to cater to local subscribers who may not have access to high quality broadband coverage. Subscribers can stream content using our advanced Adaptive Bit Rate technology, or download content using public Wi-Fi hotspots and mobile data and watch wherever they want. We’ve also created subscriber packages for as low as 39 rand ($2.70) per month. This drives customer satisfaction and avoids a one-size-fits-all approach.

MvdB: That kind of flexibility supports the success of the service in the long run. Ultimately, the platform is more than just technology. As a platform partner, we can offer support that includes business planning, people and content skills through to components of our integrated Global Media platform. This gives our service provider partners the tools they need to succeed combined with a model that offers the fastest route to the monetization of OTT video.

OTT video service is just one example of how service providers can seamlessly transition from providing capacity to creating incremental value to subscribers by offering innovative new services. There is a lot of potential for service providers to leverage additional OTT services to enhance their business.