At the end of 2012 we see 3 straight years of revenue decline for telecom operators in Europe, with at least one major group (KPN) having issued profit warnings directly citing OTT (WhatsApp) impact. At the same time we see Google apparently setting up their own network. So it’s not just a question of OTT players eating your lunch they are now here to dismantle the kitchen! Groups of operators launching OTT initiatives together like JOYN or WAC just don’t work. Within these organisations the web-DNA simply isn’t there.
A few operators are taking a different approach. Telefónica Digital, is an independent unit of Telefónica HQ’d in London and is becoming the poster child for a new way of working. Recruiting staff with software and web DNA, maintaining their own “fast-fail” product development unit, and now responsible for all the new OTT services and start-ups acquired by Telefónica including Jajah, Tuenti and GiffGaff, they are busy launching their own set of OTT services. This includes eg “ToMe”, an OTT messaging and picture sharing app. Their clear advantage is that they can utilise the massive subscriber base of Telefónica to distribute these new services, create those new business models and also reduce churn. They have even signed up to a revenue target of €5Bilion by 2015. I believe this new way of working will spread and develop until these units become separate companies with their own P&L and VC input in 2013.