OTT Video Offers Telcos Better Business Model

Often, there are multiple reasons for deploying a new technology, none of them contradictory. For example, one might argue that fourth generation Long Term Evolution (4G LTE) was deployed to gain bandwidth advantages or higher speeds. One might also argue LTE made sense because it offered lower cost per bit.

Something similar is developing in the over the top video streaming space. OTT streaming most often is touted because it offers lower cost or more choice (on demand rather than linear access). For some service providers, a better business model now seems to be driving thinking.

AT&T, for example, acquired DirecTV for a number of reasons, including the ability to achieve a lower cost structure for cost of goods, a way to supply linear video nationwide without immediate local network upgrades and as a platform for OTT video as well. That lead to DirecTV Now, the streaming video service AT&T has launched.

Now other fixed network telcos, including CenturyLink and Frontier Communications, now are looking at OTT as well, but arguably for a different reason: OTT will boost profit margins, compared to IPTV. Consider the practical implications. Where today the service provider has to supply one or multiple decoders (capital investment), OTT simply uses the customer’s own computing devices.

OTT is provisioned online, using a simple web interface, where linear TV or IPTV require a truck roll (and installation labor), external drop and possibly internal wiring, plus set-up.

So OTT video might actually driven for “cost savings,” as much as end user demand.
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