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Summary

Over-the-top content and new media players (OTTs) represent a new customer segment for wholesale communications service providers (wholesalers). Their requirements will drive additional traffic over wholesalers’ networks and increase demand for value-added managed services. To ensure their customers receive reliable, high-quality, and low-latency experiences, OTTs need an array of wholesale telecoms services ranging from dark fiber and access through value-added services, including security and fraud protection.

OTTs represent a new wholesale segment

OTTs differ from traditional wholesale customers because they start small, their needs evolve more quickly, and they act more entrepreneurially than established wholesale customers such as fixed and mobile network operators. Additionally, their entire business model depends on the telecommunications services they bundle into their products and then resell.

OTTs that create, purchase, and/or license content and other media often rely on the public Internet with its “best-effort” transport to reach their customers. However, the Internet cannot offer the performance levels most OTTs require to assure excellent customer experiences. In this environment, wholesalers should approach OTTs as a potential market for their services, ranging from basic capabilities such as dark fiber, IP transit, and access through value-added services including security, fraud protection, and in some cases content management and distribution.

Consumers want OTTs to deliver high-quality, low-latency products and services. To help build customer loyalty, OTTs of every size use some wholesale services to reach their customers. This gives wholesalers opportunities to demonstrate how they can deliver tailored combinations of transport, storage, hosting, and service management that can guarantee high-quality experiences to their users.

Although a small number of very large OTTs (e.g. Facebook and Netflix) – several of which build their own infrastructure – dominate the consumer market, they all buy significant amounts of wholesale services. Additionally, hundreds of smaller OTTs around the globe need wholesale connections and applications to provide their customers with good experiences. We believe wholesalers can capture significant business from these providers too, directly and by partnering with the CDN providers they use.

Our report OTT Media Companies: An Important Opportunity for Wholesale Carriers explains why we expect OTTs to resell, or outsource, a growing range of wholesale communications services. We also recommend changes that wholesalers should make to their organization and go-to-market strategies to attract, retain, and grow players in this dynamic new market segment.

Appendix

Further reading

OTT Media Companies: An Important Opportunity for Wholesale Carriers, TE0012-000565 (January 2016)

“Dazzling data and double standards: The future of TV advertising,” ME0003-000620 (December 2015)

“Developing the human side of wholesale,” TE0012-000563 (December 2015)

“Beyond broadcast grade – video in the OTT age,” ME0002-000633 (November 2015)

Digital Economy 2025: Consumer Services, TE0003-000876 (November 2015)

Digital Economy 2025: Wholesale Telecoms, TE0012-000548 (November 2015)

“Content and media consumption requires wholesale telecoms solutions,” TE0012-000559 (October 2015)

Carrier Services Units Come of Age, TE0012-000516 (August 2014)

Author

H. Paris Burstyn, Senior Analyst, Wholesale Telecoms

paris.burstyn@ovum.com

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