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October 02, 2007
Pyramid Research: Triple Play with Video Bad for Telcos, Good for Cable Providers
By Mae Kowalke, TMCnet Senior Editor
Triple play
service bundles (those that include three different offerings, usually phone, TV and Internet) are very popular among subscribers but may not be so good for telcos, at least in the short run. That’s the conclusion Pyramid Research reached in its latest look at the triple play market.
service bundles (those that include three different offerings, usually phone, TV and Internet) are very popular among subscribers but may not be so good for telcos, at least in the short run. That’s the conclusion Pyramid Research reached in its latest look at the triple play market.
During 2007 so far, subscriptions to triple play bundles increased 52 percent to more than 34 million, Pyramid said. Telcos are increasingly driven to offer such bundles in order to stay competitive, but it turns out, in the short run, these offerings do not improve margins.
Pyramid analyst Dan Locke said that, although multi-play offerings do enhance the competitiveness of the core services offered by broadband and cable providers, these bundles generally are not effective for pushing PSTN voice services. In other words, triple play is good for cable companies but not good for telcos.
voice services. In other words, triple play is good for cable companies but not good for telcos. “For telcos, bundled services do not slow the deterioration of fixed margins, and perhaps even exacerbate it,” Locke said in the report.
Why should this be? Locke chalks it up to the fact that, for telcos, adding a TV service to their lineup means more operating and capital expenditures plus diluted margins.
“A review of several triple-play telcos indicates flat revenue growth from disconnections and price pressure, increased Opex and Capex tied to offering video services, and margins that are declining or flat at best,” Locke said.
Pyramid cautioned that the conclusions in this report may be premature, since IPTV (News - Alert)-driven multi-play bundles have only been around for a couple of years. Thus it’s probably too soon to know, over the long term, whether adding video services will end up being a positive move for telcos. If the trend continues, however, telcos will need to adjust their strategies.
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- Telmex Acquires ZAP TV to Introduce Wireless Triple Play Service
- Triple Play: MSOs Can Grab Revenue by Converting More 'Tire Kickers'
To learn even more about triple play and IPTV, check TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP communications industry. The library offers white papers, case studies and other documents free to registered users.
, check TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP communications industry. The library offers white papers, case studies and other documents free to registered users. Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.
