Remodeling Revenue: Telco's Role in the Content Value Chain

The barriers for a CSP expanding its role in the content arena can be daunting. These barriers include:

• Inexperience in the content creation process. Unless they have the resources of Comcast, which acquired NBC for access to it content CSPs are best advised to leave content creation to the experts and partner with them instead.

• Organizational inflexibility in adapting to new competitors, changing consumer demands, and new business models. New business units from Verizon, Telefonica, and SingTel reflect the reality that managing the attributes of the digital world requires a complete break from the legacy telco’s organization.

• Cultural differences between telcos and the typically more agile, innovative and creative content organizations. Recent studies indicate that both telcos and their third-party partners regard organizational limitations as the number one barrier to the success of upstream organizations working with telcos.

All is not doom and gloom, however. CSPs have considerable assets to bring to bear on their enabling role in the value chain. Several key assets are increasingly being recognized by the content providers as being of value:

Consumer closeness. CSPs are differentiated by their proximity to the consumer. They have a long history of interacting with their customers on a regular basis across multiple touch points including bills, payments and technical/customer support. Because of this intimacy, Nielsen Research in 2010 determined that users' trust in their CSPs was second only to their trust in their banks.

Local knowledge. Market-specific expertise has long been exploited by many CSPs who target unique services and applications to their consumers. Singapore’s SingTel, for example, has developed specific Singaporean apps targeted at the demographics of its customer base, such as a shopping app that finds local deals. Local knowledge, not only in cultural terms, but of regulatory requirements, taxation and DRM, coupled with access to niche third party developers, put the CSP in the best position to deliver and optimize content for a particular market.

Customer intelligence and consumer preferences. Processing huge volumes of current and historical customer data, CSPs are strongly positioned to share that data, (made suitably anonymous or aggregated to protect consumers’ privacy), or provide marketing services to third parties. Understanding the behaviors and market trends is especially important to content developers seeking to expand their market reach, particularly to under-served or under-represented segments like women or older consumers.

Bundling and personalized packaging. The CSP is uniquely positioned to bundle content from multiple sources, and package it with other telecommunications services allowing each customer to personalize a simple package of services to suit his requirements and budget.

Quality of Service. The CSP can enable third parties to bundle QoS as part of their offer, a feature that will become increasingly important in the growing segment consuming corporate and industry-specific applications and content. A video conferencing provider, for example, will be able to differentiate its offering by enabling enhanced call quality, for a price. And the CSP, as the enabler and guarantor of that quality of service, can charge both the third party and the consumer for the role that it plays.