Triple Play

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Camilla Dahlen

[April 1, 2005]

Triple Play as Springboard to Multi-Service

BY CAMILLA DAHLEN, President, Highdeal Inc. & IPlay3 Managing Director


Without a doubt, the convergence of voice and video over packet-based networks is rapidly transforming entire markets. While a slow starter, VoIP is now having its promised revolutionary impact on the telecommunications industry, as new entrants like Vonage and Skype rewrite the rule book on voice communications. Who would have thought that some of the largest telcos in the world, including AT&T and MCI, would be acquired at a fraction of their historical valuations and largely for their IP offerings?

Today, IPTV is having a similar impact on the video industry, forcing cable and satellite operators to rethink their businesses and their value propositions. Following incremental innovations like Netflix, third-party VoD providers like CinemaNow and Movielink are also having an impact the video marketplace. Other third-party services, such as Tivos video recording service, are further disrupting the traditional video business. Whether the incumbents like it or now, new services will find their way to consumers.

The level of disruption can be significant. Sixty percent of Tivo users say they use the service to skip commercials. If users skip commercials, then what happens to the traditional advertising revenues that fund the majority of programming today? Network-based DVR will turn business models upside-down, and, when combined with new compression technologies like Envivios MPEG-4 AVC, will ensure that the video service we know and love today transforms into a totally different multimedia viewing experience.

Further still, the triple play market will continue to get more and more crowded. In addition to the traditional telcos and cable MSOs fighting the triple play battle, we are seeing a rising tide of alternative broadband providers:

  • Wireless broadband using WiMAX, mesh and satellite technologies
  • Broadband over power lines (BPL) in emerging markets
  • Community broadband providers ranging from municipalities and government agencies to universities and research parks

When combined with the third-party on demand providers like Vonage and MovieLink, the long-term winners in the broadband wars could not be less clear. What is clear, however, is that the services offered over high-bandwidth networks will be continue to rapidly evolve, while voice margins will continue to shrink. For this reason, it is critical for service providers to expand their subscriber relationships with highly-targeted offerings with complementary services that meet the unique lifestyle needs of their customers.

So, where does triple play lead us? Triple play is not an end-game but, rather, a transition strategy to a longer term goal of becoming a multi-service provider but to become a multi-service provider, SPs need to easily create innovative offers that are not easily replicated by the competition. This requires an infrastructure designed for rapid service bundling and micro-segmentation to target service, for example, for the Spanish-speaking soccer fan. This level of targeting is unfamiliar to most telcos and cable MSOs.

Everything over IP or Services over IP can include everything from ringtone downloads to rich media conferencing to massively multiplayer online gaming. It can also include important functions, such as web & spam filtering and enforcing conditional access. In short, the successful triple play vendor will offer a portfolio of targeted, lifestyle services to individual consumers or business customers.

One of the principle challenges with this new multi-service environment, whether VoIP, IPTV or multi-player gaming, is service pricing & packaging. Unlike the well-proven pricing models of the past, marketing organizations are facing unprecedented pressures in the triple play marketplace that can only be addressed with next-generation marketing software:

  • Find new revenue streams
  • Avoid cannibalization of existing revenue streams
  • Maximize margins and ARPU
  • Provide simple-to-understand pricing conducive to uptake
  • Provide some level of predictability in a dynamic market

A few cases in point:

VoIP

  • VoIP providers are pursuing the full range of pricing strategies from pure flat rate, monthly plans to pure pay-per-use plans for subscribers that do not want to commit to a monthly subscription
  • More innovative packaging providers subscribers with the ability to self-impose and manage spending limits for family member and employees
  • VoIP applications, such as paid search, introduce alternative revenue streams based on advertising

IPTV

  • There is a growing call from the marketplace to break up the traditional bundles of programming into a la carte offers
  • IPTV offers the ability to package content for specific demographic segments

Mobile (for the quadruple play)

  • Since broadband triple play providers need to leverage third party networks to introduce a mobile offering, either as a reseller or MVNO, pricing becomes even more critical given the razor thin margins.

The bottom-line is that in a competitive triple play market, and all signs point to the broadband wars being fought with particular zeal, service providers need to equip their marketing organizations with infrastructure that enables them to succeed: to deploy services in real time, to test business models, to create bundled offers that include third-party services, to meet their objectives by RightPricing their services. Further still, they create lifestyle bundles that address the unique interests and demands each of us experience: the work-at-home parent, the devoted golfer, the online gamer. Otherwise, by simply offering the same basic services that every other triple play provider offers, youre waging a price war, and its entirely possible the outsiders win in that war.

The first step to becoming a true multi-service provider is to master the core services: voice, data and video. The IPlay3 solution enables service providers to master these core disciplines while positioning themselves to find new revenue streams in a rapidly changing marketplace. Hold onto your seats, this triple play story is turning out to be a real thriller!

Ms. Dahlen is responsible for Highdeals strategy and operations throughout the Americas. Previously, Ms. Dahlen had global account management responsibilities for EHPT, a joint venture between Ericsson and Hewlett-Packard, where she served customers throughout Europe, South America and USA. She helped build EHPT's South American operations into one of the most successful OSS/BSS software businesses in the region. Prior to EHPT, Ms. Dahlen led strategic marketing and competitive analysis initiatives at Telia, the telecommunications leader in Scandinavia and northern Europe. She holds a B.Sc. in Business Administration from Boston College and a bilingual MBA in Spanish/English from Instituto de Empresa in Madrid, Spain.

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