Telecoms operators and content providers are trapped in a vicious circle that they must break in order to justify network investment and encourage end-users to pay for better quality services.
That was the message shared by Daniel Tang, CTO of Huawei's network product lines, at the opening session of Broadband World Forum in Amsterdam on Tuesday.
"[There is] whining on both sides," Tang said. While telcos are complaining that they cannot generate enough profit to justify sizeable investments in their networks, content providers insist telcos should invest more to enable them to offer a better quality experience to end users. "[There is] not a good mood [in the industry] right now," he said.
As it stands, Tang explained, "customers don't really get very high-definition video," because over-the-top (OTT) content providers are basing their offerings on average connection speeds, which in many cases are not particularly high. At the same time, telecoms operators are unable to convince all but the earliest adopters to subscribe to high-speed broadband services because the high-quality services that would justify such a move are not yet widely available.
But Huawei believes that the cycle can be broken.
One solution is for operators to break into the content market themselves. Tang made reference to U.K. incumbent BT's recent launch of its BT Sport channels, backed by a hefty spend on content rights.
"It has been very successful, from what I hear," said Tang. However, he admitted that "not every operator has £1 billion to invest into the content side."
The solution then for most operators is to work more closely with the companies offering content over their networks.
"Let's work together to create more value," Tang said. "We need to create extra value so they (the end users) can pay for that value."
China Telecom is working with a number of content companies to provide higher quality services to paying or VIP customers. The extra $5-$10 generated from that "targeted boosting" is shared between the telco and the content company.
"It's about creating the value together," he concluded. "Eventually the customer pays and we share that value together."