It is interesting to see what has happened since Telstra took the decision to embrace structural separation and close the PSTN (Public Switched Telephone Network) in order to move to a NGN (Next Generation Network) environment. That move heralds a fundamental change to the way telecoms infrastructure operates, a fact that is so far not too well understood by many operators around the globe, simply because of their monopolistic way of thinking.
Canberra's decision to establish a nationwide utilities based wholesale-only NGN infrastructure means that local telcos are no longer constrained by business models based on delivery of the infrastructure and Telstra is leading the pack when it comes to exploiting this potential.
Following their fundamental change of direction, Telstra has rapidly announced investments in cloud computing and has now launched its first OTT (Over The Top) model, using Facebook to let customers pre-pay their mobile subscriptions; it is the first telco in the world to do this.
Telstra is using Facebook as a service provider (telco) here, which is of course an enormous change to the traditional way of doing things. It's a clear sign that telcos are starting to thnk outside the box as they face up to the new reality. The fact is it's getting harder and harder for telcos to catch up with the OTT players and if you can't beat them you are better off joining them. This is the new reality for telcos and whether they like it or not, there is a massive displacement taking place from old voice and messaging services by OTT based models.
The unshackling of the old model gives Telstra the opportunity to start exploring totally new business models based on OTT. Nobody knows where this will lead to but it most certainly is one of the key avenues towards the new telco future.
Embracing the OTT model also opens the way for telcos to start offering certain services internationally, with the OTT model the world becomes their market place. Many of the OTT services already have an international character and there will obviously be fewer players who will be able to play a significant role in the global market. It is not too late for telcos to move into this direction, but if the 30 years of telco history – stopping innovation and competition in order to protect their monopoly - is any guide, it's likely that a number of players will fail to take this opportunity.
Imagine a scenario where mobile operators are going to provide these OTT prepaid services around the globe – something Apple is going to facilitate in their next iPhone – and people can basically use prepaid services within an international competitive model. Then imagine what this is going to do to the business model of mobile operators.
Once telcos start to understand the business opportunities in the OTT model, it also will become much clearer to them how important the quality of the network is in order to deliver those OTT services, and this could create a better business model for them to far more seriously start looking at Fibre-to-the-home (FttH) upgrades, perhaps together with other OTT suppliers. Look at Google, which is building a FttH network in Kansas City, they certainly understand the need for a FttH network in order for them to secure their future.
Telstra and Google are some of the few leading companies that are pointing the new telco way towards the future and they are setting the example for others around the globe.
Paul Budde is the managing director of BuddeComm, an independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries.