| |
Triple-play: One Critical Challenge
By Charles Goldfinger,
August 2006
After many false starts, the long-awaited
convergence of media and technologies has arrived. These
converged services are known as triple-play (the bundling
of internet, VoIP telecom and IPTV) and quadruple-play
(the bundling of internet, VoIP telecom, mobile telecom
and IPTV). Both incumbents and newcomers in various
sectors are rushing to bring a bewildering range of
triple- and quadruple-play offerings, making the already
competitive media and technology landscape more crowded
and complex.
Performance improvements and the
growing customer penetration of broadband internet have
made triple-play possible. By allowing a great flexibility
of configurations and access points, broadband internet
access is the unifying force on the technology front.
One can use a PC to watch television, a mobile phone
to access internet, and the Internet to make cheap phone
calls. Yet, customers do not have to make exclusive
choices and put all their eggs in one basket (or a single
distribution channel) with these new services. Triple-play
makes “mix and match” a universal attribute
for both demand and supply.
Now that the technological hurdles
have been overcome, the business challenge of convergence
has come sharply into focus. Past efforts have not been
very convincing. AT&T spent over 140 billion dollars
in cable TV acquisitions with practically nothing to
show. Microsoft spent similarly large sums and a great
deal of top management attention in trying to become
a media giant. Yet, they can not really claim to have
accomplished this goal. On the mobile side, efforts
to generate more content revenue from 3G networks have
not been fully conclusive.
While some argue otherwise, the
business challenges with triple-play are unlikely to
be easier. According to a range of detailed studies
carried out by Forrester Research, all the major telecom
companies in Europe (DT, France Telecom, and Telefonica
among others) will lose a great deal of money on triple-play
offerings.
Yet despite those dire perspectives,
triple-play offerings are not slowing down. One explanation
for this trend is the widespread belief that as bad
as economic prospects for triple-play appear, it is
better to be present rather then absent. Presence enhances
the chance of survival in the competitive shake-out,
which everyone believe is bound to happen. Considering
that previous announcements of the 'death of television'
or the extinction of POTs were premature, a degree of
caution is advisable with regard to powers of triple-play
as well.
Another explanation for why triple-play
offerings are growing is that the business models for
these bundled services may prove to be more complex
than Forrester assumed they would be. In particular,
triple-play protagonists are likely to seek a wider
range of revenues than direct payments from end-customers.
In the media sectors, whether old (Hollywood) or new
(Google and Yahoo), indirect revenues from advertising
and other forms of third party payments, represent an
essential and growing income stream.
Triple-play will make a competitive
structure of ICT sector even more dense and complex
than it is today. One thing however will still remain
critical to triple-play’s success: the importance
of the business model.
|
|
Highdeal Point of View
Service
bundling or service richness?
Triple-play
offers are fast becoming a must have, not only to combat
competitive threats, as we witness even well known triple-play
providers see their market shares decline, but also
as churn reducing strategies, tying customers into a
whole new portfolio of services. In some less advanced
or less competitive markets, new single service offerings
such as VoIP are strategic choices and rather than go
down the multi-service route, the focus is typically
on offering more feature rich services. Whether the
approach is service bundling or service richness, the
objective is ultimately to increase ARPUs and drive
customer retention, and whether such new offers can
deliver on this promise, still remains to be seen and
will be dependant on the marketing mix applied.
A
need to be reactive and agile
Service
providers with the best chances for surviving the “competitive
shake-out” will undoubtedly be those with the
most well thought out and viable business models, and
which can adapt and react swiftly within an often volatile
marketplace. In real terms this means pricing and service
bundling according to the needs of specific markets
and adopting a more retail oriented approach by micro
segmenting and tailoring offers to groups based on demographics,
personal interests and ethnicity for example. Promotions,
discounts and loyalty related service bonuses should
be part and parcel of any offering as well as the ability
to differentiate offers rapidly by introducing exciting
new content from any number of third parties. Finally,
the ability to swiftly adapt and refine existing offers
in response for example to a competitors new offer,
will be vital in an increasingly unpredictable market.
Learn
more about the Highdeal solution for next generation
service pricing, rating... |
|
