With South Africa’s mobile operators targeting multi-media options, including mobile TV, as they look to diversify their portfolios, Gareth Mellon, senior industry analyst for ICT at Frost & Sullivan believes that the uptake potential is very good.
Bloomberg recently reported that Telkom CEO Sipho Maseko has held talks with a host of large media companies including Comcast, Bertelsmann, Naspers, and Netflix.
In November, it also reported that Vodacom is reportedly also in discussions with Naspers over access to its television content, while MTN has also pointed to multi-media developments over the coming months.
BusinessTech put several questions to F&S’s Mellon.
Could partnership’s like above work in SA?
“There is certainly potential for this to happen in SA, although the uptake will depend on the actual partnerships that arise as consumers will be swayed by the content that can be provided. Content consumption patterns have changed immensely in recent years and on-demand services are increasingly being sought,” Mellon said.
“The relatively high cost of satellite TV and lack of competition in this respect are also likely to encourage such partnerships.”
In what form might these partnerships take place?
“One should distinguish between paying a provider for access to specific content and paying an operator for the transfer of data to enable that content on one’s device – whether it be fixed-line, wireless or mobile (or even satellite),” Mellon said.
“Partnerships could either look at paying for content and providing the data transfers for free (or at a discount), thus sharing the content revenues. Or one could provide free content and share the revenues from the data transfers.
“The other aspect to consider is the provision of different packages of access to content, or on-demand content delivery,” he said.
Do operators have the necessary networks to facilitate such a partnership?
“Fixed-line speeds in SA are already fast enough and the growth of 4G means that mobile networks also have sufficient capability. However, in both cases, coverage is still largely limited to the country’s major urban areas,” Mellon said.
“At a global level, wi-fi networks are increasingly used to ‘off-load’ data from carrier networks, so we can expect to see continued increases in wi-fi coverage in SA (Telkom has already invested significantly in expanding its wi-fi footprint).
“Content Delivery Networks (CDNs) also provide the means to increase connection speeds so we can expect involvement from them in any partnerships that are established.”
Have similar deals taken place in more developed economies and to what success?
“Typically, operators have partnered with CDNs, who themselves have access to content providers, but this seems to be shifting,” Mellon said.
“AT&T has enjoyed particular success in the roll-out of its IPTV platform, offering multiple partnerships in different ‘bundles’ of content access.”
What are the pitfalls?
“For carriers, overloaded networks would result in poor quality of service for customers, and the networks would also stand to lose out on data revenues, especially if the price points for content remain high,” Mellon said.
“Content providers could lose out on subscription revenues and potentially cannibalise existing services.”
“Very good, especially given the current lack of competition in the content market and relatively high prices. We are already seeing an uptake of fixed line data services and large mobile data packages,” Mellon said.