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.

 

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.

 

“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.

 

---

---