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ISSN : 1598-7248 (Print)
ISSN : 2234-6473 (Online)
Industrial Engineering & Management Systems Vol.16 No.4 pp.517-523
DOI : https://doi.org/10.7232/iems.2017.16.4.517

Using Multi Criteria Decision Making for Selection the Telecom Operators’ Strategy for OTT Services: A Case Study of Mobile Communications Company of Iran

Omid Valipour*, Mohammad Reza Hosseini
Department of Business Management, Babol Branch, Azad University, Babol, Iran
Corresponding Author, o.valipour@tci.ir
20170808 20170821 20170918

ABSTRACT

While mobile operators are competing closely, new players of OTT (Over-The-Top) services such as Skype, WhatsApp, Instagram providing communication and media services in the context of mobile communications have created a new space in the ecosystem of mobile services. These companies make use of the internet capacity of mobile operators instead of creating a dedicated network. However, on the one hand, mobile operators are in need of huge investment in order to take advantage of extensive telecommunication networks, and their income, on the other hand, has been significantly reduced. Therefore the success of mobile operators need to adopt a right strategy against OTT services. In this paper, strategies using Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis were developed by evaluating the external and internal environment factors of Mobile Telecommunication Company of Iran (MCI) as well as using library and field studies into company experts. Then, the strategies were prioritized using Analytical Network Process (ANP) as an efficient techniques of Multi Criteria Decision Making (MCDM) which deals with dependencies between criteria. MCI should be focus on the strategy of “cooperation and partnership with OTT companies” and then toward the strategy of “creation of innovative service and penetration into new markets.”


초록


    1.INTRODUCTION

    Due to the impact of large-scale environmental factors on the growth and survival of organizations, proper understanding and evaluation of factors such as technological innovation, economic, social, consumer behavior, market trend and development, competitors, rules and governmental regulations, etc., are integral to profitability and success in the telecommunications industry. With the introduction of 3rd and 4th generation mobile industry with the ability to provide services data mobile broadband (MBB) (Aidi, 2012) and emergence of applied programs under mobile system, the prevalence of smart phones among mobile subscribers and the rapid development of free applications messenger such as Skype, Whats App, Instagram, etc., telecom operators’ revenues from SMS, domestic and international calls, and multimedia services has dropped significantly.

    OTT services include a variety of multimedia services and contents, which bypass telecommunication networks by mobile internet operators and provide services to subscribers; the services offered on data network consist of communicative, media, e-commerce, social media services and cloud services. With the arrival of the new players in service delivery arena in the context of mobile broadband, a new space has been created in the ecosystem of telecommunication services; These companies make use of the broadband network capacity of mobile operators in lieu of creating a dedicated network in order to provide service on the internet, while telecommunication operators need to make huge investment in order to set up and operate broad telecommunication networks, which in turn cause telecommunication operators to confront them and their income to drop significantly (Leal, 2014).

    The success of telecom operators in this new market calls for the adoption of a good strategy to deal OTT services and a new look at “service” and a study on opportunities and challenges ahead of them in this ecosystem. In this regard, strategies for business model change, service portfolio change, business model, finding new resources for profitability, transition to new generation networks, and partnership with other players and using new strategies for creating new opportunities for making money can helpful in protecting the position of operators in different sectors of this competitive market. This article uses a strategic approach, deals with the emergence of the multimedia applications and evaluates the weaknesses and strengths of telecom operators (case study of Telecommunication Company of Iran) with regard to the threats and opportunities ahead in order to confront them, and it uses multi-criteria decision making techniques in order to offer a scientific and algorithmic method for choosing and prioritizing appropriate strategies.

    2.LITERATURE AND RESEARCH BACKGROUND

    Today, because of decision making complexity and elegance in business, strategic management has been widely used by most organizations in an attempt to choose a strategy on competitors and environmental changes. Strategic management is the art and science of formulation, implementation and evaluation of multi- functional decisions which enable organization to achieve its long-term objectives (Dess et al., 2006). In order for an organization to choose the best strategy on the path to its objectives, a general framework is expressed in several stages. The phase of formulating a strategy consists of two other phases namely “strategy assessment” and “strategy selection.” The question is “how can an organization choose its desirable strategy and what good instruments are there for recognition and evaluation of strategies?” Each organization should choose the best and most suitable strategy from possible alternatives by considering its internal weaknesses and strengths as well as opportunities and threats in its environment. Multi-criteria decision making techniques are used for prioritizing and selecting an option from among multiple choice options.

    Given the modern and novelty of the research literature, few academic studies have been conducted in this respect, in the sense that market reports and analysis of related documents and interviews of experts in the field of strategies used in other telecom operators in the world were mostly used to conduct the present research. In regard to research method, many studies have been used so far concerning the formulation of organizations’ strategic programs by using multi-criteria decision making models of strategic studies in order to prioritize strategies. To improve SWOT analysis, one of the best techniques that can be employed is multi-criteria decision making technique, which was developed first by Kurttila et al. (2000) in the form of a synthetic method for fixing existing weaknesses in the steps of measuring and evaluating SWOT analysis. The method of the researchers is based on the application of analytical hierarchy process (AHP) in SWOT analysis. Following this study, many researchers including Stewart et al. (2002), Shrestha et al. (2004) used this approach. In this regard, two researchers, Yüksel and Dağdeviren (2007), used a more recent and efficient technique Analytical Network Process (ANP) instead of analytic hierarchy process (AHP), by using this approach, they prioritized and then chose a strategy which has been used a lot in many studies so far (Cheng and Li, 2007).

    3.RESEARCH CONCEPTUAL MODEL

    In the analytical network model (ANP), goals, criteria, and alternatives are marked. The network structure of ANP allows alternatives to be prioritized with regard to criteria dependence. According to SWOT analysis and available literature, ANP model was developed; Figure 1 shows the analytical network model of the research (including clusters and nodes) which are drawn in Super Decisions software. In this figure, clusters represent decision making levels which consists of goal (choosing the best strategy), main factors of SWOT analysis, secondary factors of SWOT (4 secondary factors for each main factors namely strengths, weakness, opportunities and threats) as well as strategies.

    4.METHODOLOGY

    Managers need decision making and a comprehensive and suitable strategy for organization in order to choose a strategy. So far, many tools and quantitive techniques have been used in this field, but since one of the most important components in this regard is decision making with multiple considerations, the use of multicriteria decision making techniques can be useful. Anp is a multi-criteria decision making with special features that can help managers in the analysis of complicated environmental conditions and non-linear relations between various factors and variables. Due to considering reciprocal relation of components, compatibility to judgements, pairwise comparison of compenents, and ultimate prioritization of the proposed alternatives, this method can overcome the problems of hierarchy relations (from top to bottom or from bottom to top without considering the concept of feedback) and serve as an effective decision making technique for formulation of a good strategy for organizations. This process is a flexible method, helping decision makers by breaking through a complex issue.

    In the present research, we first evaluate strengths, weaknesses, opportunities and threats of OTT services by holding a meeting and interviews with experts of MCI company, and studied the relation between the factors and strategies (SWOT analysis) by referring to books, articles, internet resources as well as studying and reviewing market reports and analysis of related documents of international business market research institutions and articles and interviews and strategies employed in other telecom operators in the world. In next phase, by using ANP which takes account of dependence between criteria, paired comparison of obtained factors was conducted and the proposed strategies were prioritized and superior strategy was chosen by presenting a decision making network of all internal and reciprocal relations between factors, sub-factors and strategies developed by ANP questionnaire completed by company experts.

    The present research is an applied research by purpose and descriptive by data collection; both library and field study were used for data and information collection. Since company experts have a better ability to identify perspective, formulate strategy and compare strategies, the statistical society of this research consists of 15 experts of MCI company (including board of directors, deputies, CEOs, senior counselors, heads and experts of company) who have sufficient expertise to participate in the evaluation of strategies. By identifying internal and external factors and evaluating weaknesses, strengths, opportunities, and threats of organization, SWOT analysis matrix was formulated (Table 1) and operable strategies were proposed and prioritized for the organizations. In doing all research processing and analytical operations for solving the problem of multi-criteria decision making with network analysis process, Super Decisions software was used.

    ANP approach consists of building Hierarchy and decision making network, formulating super matrix, conducting pairwise comparisons of criteria and alternatives and choosing the best strategy and organization priority for OTT services. Super matrix is used for analysis of internal and reciprocal dependency between factors, subfactors and strategies and its components are developed from pairwise comparison matrixes and placed in it. A super matrix is in fact a partitioned matrix in which each part shows the relationship between two nodes (decision making level) in the whole problem of decision making. At this point, through interviews conducted with company experts, they were asked to determine factors affecting one another at different levels of network model, and primary super matrix was formulated based on network structure of Figure 1. Pairwise comparisons are the most important and influential par in the calculation of strategy weight. At this point, given the network model obtained for the research, matrixes of pairwise comparisons of factors and criteria were made available to company experts as research questionnaires and all matrixes of pairwise comparisons were obtained, next, pairwise comparisons were performed and were entered into SuperDecisions software by geometric mean method.

    In the next phase, their incompatibility rates are computed and the weights obtained from the comparisons are entered into the super matrix. In doing all the pairwise comparisons in an attempt to calculate incompatibility index, analysis of matrix sensitivity and compatibility maintenance, Super Decisions was used. In what follows, due to the large volume of operation, a sample of weighting data obtained from questionnaires and stages of pairwise comparison based on the whole weight of ANP model in Super Decisions software is shown in Figure 2. In the final stage, the overall weight of each of strategies is determined by multiplying the weights obtained from each in the previous stages and final decision is taken with regard to it.

    5.RESULTS

    To choose the best strategy for MCI Company against OTT services, normalized weights of organization strategies shown in Figure 3 are used. According to this, superior strategy is WO strategy (partnership and cooperation of telecom operators with OTTs) and SO strategy (creating innovative service and penetrating into new markets) takes the next priority.

    According to normalized weights, MCI company have some strengths against OTT companies, the most important of which is position and brand of company among customers and a broad and nationwide network with facilities providing the mobile broad band services. It also has some weaknesses, the most important of which is the high charge of traditional services compared to OTT services and shadow government management in the organization. Likewise, in the evaluation of external factors, the most important opportunity of MCI against OTT companies is the growing demand for mobile data consumption due to OTTs, while the biggest threat to the company is the reduction of Call and SMS revenue in operators’ earning portfolio.

    Thus, the priority of the organization’s strategies against OTT services with respect to normalized weights are as follows:

    • 1. Partnership and cooperation of telecom operators with OTT companies

    • 2. Creation of the innovative services and penetration into new markets

    • 3. Directly provide OTT service

    • 4. Blocking/ignoring of companies delivering OTT services

    In the first strategy, a collaboration and partnership is formed for survival and profit making (win-win cooperation), in the sense that the telecom operator cooperate with the existing OTT companies and both sides take advantage of this industry by forming a complete value chain of OTT services. With the formation of Telco- OTT1 concept, OTT services side with telecom services and infrastructure and ability of telecom operators who have technical expertise and operational experience in network communications are joined with the ability of OTT companies in content and cloud computing and value chain of OTT services is completed and new products and services are offered to consumer. Other advantages of this strategy are saving in costs and development time (the need for less investment and reduction of ownership costs), strengthen the brand, and presentation of a new competitive advantage, increase of current customer increase and attraction of loyal customers, taking advantage of OTT brand in order to use data, creating innovation, value added and profitability (new revenue stream), increase of market share in VOIP2, the use of cloud technology, etc. (Ross and Erasmus, 2013).

    In the strategy of creation of innovative services and penetration into new markets, operators are required to penetrate into service section as well as serving as supplier in the field of network and infrastructure, and create new markets with high potentiality for potential customers of new services, by a new look at “service” section and including OTT services namely content, cloud computing, etc., in conjunction with telecom services and use of new strategies in order to provide new opportunities in the field of business; innovation in technology and applications for customers, customer base analysis with data mining of customer information (use of commercial purposes, company promotion, etc.), machine to machine (M2M) applications, mobile government, mobile commerce, mobile banking, mobile health, mobile education, cloud applications (communicative control system, etc.) setting up platform of content delivery networks (CDN), Telco customer data analysis, cloud computing, data centers and storage, presentation of digital content, setting up a joint platform with rich communication services (RCS), providing an integrated infrastructure of service delivery etc. (Ganuza and Viecens, 2014).

    In the strategy of directly Provide OTT service, operators can enrich this content and deliver OTT services by applying network infrastructure and customer recognition, in the sense that operator produce OTT programs internally and incur costs of initial investment, publication, updating, maintenance and innovative movement that come with a competitive market

    The strategy of block includes control of OTT services by filtering, setting tariffs, bandwidth, etc., which means the opportunities coming up and their users’ rights are overlooked and cannot be used for long (Brown, 2014).

    6.CONCLUSION AND RECOMMENDATION

    In this paper, the subject of OTT service emergence in the world of the internet and its effect on telecom operators’ business was briefly elaborated and opportunities and threats posed for telecom companies were studied; by using library studies and field studies, the strengths and weaknesses, opportunities and threats ahead of MCI company against OTT services were explored in the matrix of SWOT analysis. Subsequently, with ANP network analysis method, as one of the techniques of multi-criteria decision making which deals with dependence between criteria, the proposed strategies were prioritized and the appropriate strategy was chosen. In general, by summing up the weights of all internal strong and weak points and opportunities and external threats, the result was obtained that Mobile Communication Company of Iran relatively have some weaknesses against OTT services. Based on the results of the analysis, the company should direct its focus on the strategy “cooperation and partnership with companies delivering OTT services, and give the next priority to the strategy “creation of innovative services and penetration into new markets.” Moreover, based on studies conducted so far, vertical integration, market penetration, market development, product development and participation are suggested strategies. Despite this, the effective strategy can be a mix of aggressive (SO) and conservative (WO) strategies, which helps to maintain the current situation and gain competitive advantage in the market.

    Since ANP is a comprehensive and strong method for thorough decision making, it is suggested that Fuzzy ANP be used when we face high uncertainty and input data are faced with ambiguity. In the future studies, we can combine multi-criteria decision making techniques with other methods to choose organization strategy; for instance, the hybrid model ANP and Data Envelopment Analysis (DEA-ANP) that output of ANP method is used as input of DEA method.

    7.ACKNOWLEDGEMENTS

    7.

    I would like to express my gratitude to all dear colleagues in MCI Company for their efforts, invaluable comments, constructive suggestions and collaboration, which helped us carry out this research.

    Figure

    IEMS-16-517_F1.gif

    Research network analysis model in SuperDecisions software.

    IEMS-16-517_F2.gif

    Pairwise comparison of alternatives of the cluster "strategy” in proportion to the sub-criterion of node “O4”

    IEMS-16-517_F3.gif

    Prioritization of organization strategies against OTT services with normalized weights.

    Table

    SWOT matrix and MCI's strategy against OTT services

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