In an ever-growing connected home market, providers of smart products and online services – OTT players – are thriving. But as the number of users and connected devices throughout the home increases, the need for a better Wi-Fi connection throughout the entire home is becoming more important than ever. So, what role do the CSPs play in all of this – are they merely Internet providers or is this in fact an opportunity for new revenue streams?
Posted by Patrick Kato.
What does over-the-top (OTT) really mean?
OTT, in its traditional sense, means market players that in some way offer digital products online – Netflix is one example. The operator is not involved in the delivery of such services in other ways than that they supply the actual Internet connection. The OTT term, however, has also started being used in a broader sense for so called OTT application providers. These market players also provide hardware and software for online services. OTT application providers include companies such as Google and Amazon that, among many other things, deliver products and services for the smart home.
Increased use of OTT services – a problem for the CSPs
OTT services are growing rapidly. For example, a recent study by Cisco shows that video content now makes up 80% of all internet traffic. This, in turn, means increased bandwidth demands and requires better Wi-Fi solutions for at-home Internet use. Low cost, low performance routers and WiFi equipment will eventually cause a bad customer experience that in its turn will turn the customer to retail alternatives. Equipment obtained in this manner can be hard to manage by the CSP causing the service level to decrease.
The end customer, however, generally doesn’t differentiate between bad Wi-Fi and bad Internet, and oftentimes blame the operator for the low quality of their connected home services. Unhappy customers will begin to distrust their operators, which could lead to a lack of growth and increased churn for the CSPs. It also leads an increased number of calls and complaints to customer services and longer handling time, since the customer service representatives can’t give support for equipment that they haven’t supplied.
The time has come for CSPs to make a strategic decision
To meet the new demands that the increased use of OTT services create, full Wi-Fi coverage with great speed is fundamental. For CSPs it is therefore a strategic choice whether to provide products and services to improve customers’ Wi-Fi experience or not. By doing so, they could become more competitive by improving and taking charge of a customer relation that is otherwise affected by parameters that they are not able to control. It could also become a new source of revenue. While hesitating to take this strategic step, other niche suppliers are already developing new products and services that fit the customers’ needs at a rapid pace. These market players are usually large companies, with lots of resources for R&D.
For CSPs it is therefore high time to make a choice. They could choose to continue to only provide Internet connection – meaning that they only compete on speed and price, which unfortunately doesn’t make for very loyal customers. Or they could choose to add value by offering products and services to differentiate by focusing on customer value.
Would you like to know more about how we at Seliro can help you make your choice? Please do not hesitate to contact us!