By Sameer Ashfaq Malik
Over-the-top (OTT) players are encroaching on operators’ return on investment (ROI), thus pressuring them to upgrade their infrastructure, despite the fact that they gain very little revenue from the bandwidth-hungry applications they carry. Operators are striving hard to invent new business or cooperation models. This is where FMC 2.0 comes into play.
What is FMC 2.0?
Fixed-mobile convergence (FMC) has been redefined, with Huawei adding content into the mix for FMC 2.0 (FBB + MBB + Content) – a long-gestating concept and imperative that defines full/unified service operations for fast-moving operators and OTT players. It entails a partnership-driven, user-centric model, comprised of business monetization, robust network construction, and unified network transformation. FMC 2.0 is composed of four elements:
Broadband + Content: Operators must start acquiring or owning content, if they haven’t already, and shift their business model away from broadband to content.
MBB → MBB + FBB: Mobile operators must add fixed services to the mix to reduce churn.
Content → Broadband: Content providers and other OTTs are already wading into the infrastructure game, a trend that could and should continue.
FBB → FBB + MBB: MSOs are adding Wi-Fi and other forms of offload to their robust fixed holdings to stay competitive with OTTs.
With always-on connected ecosystems now the norm, fixed and mobile networks are becoming indistinguishable, at least from the user’s point of view. Unified service operation with an FBB focus, coupled with a better quality of experience and application-driven architecture, is a must if telcos hope to retain market leadership at a reasonable TCO. Monetizing user QoE that differentiates, beyond simple connectivity, gives operators a strong argument to establish new business-to-business-to-consumer (B2B2C) relationships, and share revenues with content providers and other OTTs.
Improved business environment
Huawei’s FMC 2.0 business modeling framework question improves the ROI while holding the “I” part of the equation in check. In North America, a certain operator found that it’s bundled MBB-FBB subscribers are 10% more satisfied than it’s unbundled subscribers, while its ultra-broadband market share is growing steadily. Another operator in Western Europe is offering a quadruple-play package of Internet, television, mobile, and fixed-line services, helping attract roughly 1.5 million subscribers in a single quarter, including 40% from competitors.
B2B2C engages industry while monetizing broadband
By acquiring exclusive content to provide through dedicated channels. Others cooperate with OTTs for better traffic monetization and user experience. No matter which path operators choose, B2B2C will play a vital role where value-based pricing is of paramount importance as compared to price-based modeling, where tariffs or simple packages alone are insufficient. Value-based pricing is based on improved open-network capabilities, bringing maximum differentiation and impact to businesses and consumers. Value-based monetization is based on tailored subscription packages that can improve QoE as opposed to bandwidth. With mutual collaboration between telcos and OTTs, a new level of service granularity is possible with service providers (as pipe owners) providing improved end-to-end QoS architecture for OTT service flow. There are four different value-based monetization models for broadband that achieve three key strategic goals for telcos – preservation of legacy voice & text services, expansion of the broadband access market, and tapping of the enterprise potential of broadband.
Price for bandwidth: This is fairly straightforward. For non-price-sensitive consumers, speed does matter, and they will pay to upgrade.
Broadband + premium services: In this scenario, operators add something special to the bundle, like BT does with its sports offerings, and this can make a real difference in terms of subscription adds and profit.
Average bandwidth + network capabilities: This is where telcos open their networks to third parties, and share in the resulting revenue.
Average bandwidth + sponsorship: In this arrangement, the third-party’s contribution is pre-installed.
The latter two models represent the essence of value-based pricing; through engagement, platform partnership and revenue sharing, the best user experience is delivered through an open network. Neither broadband service providers nor OTT players can be in complete control of the Internet ecosystem. China Telecom Fujian has partnered with Thunder, China’s largest P2P client, offering temporary high-speed download services to VIP telecom users via bandwidth on demand, reducing download times from hours to minutes.
A combined Telco-OTT strategy results in lower bandwidth costs for OTTs and lessens bandwidth scalability pressures for operators. Experts are sticking with their predictions that this will come to pass, as it has with Netflix, and its placement of content delivery network (CDN) edge servers into operator data centers (DCs). As 4K starts becoming the norm for video content, other providers will surely have to follow their example.
