Convergence is finally happening. For years this idea of convergence was only a vision driven by fanciful notions rising out of technical possibility rather than true business needs. Today, that has changed. Business drivers and consumer behavior have combined to effect a perfect storm accelerating the adoption of bundled voice, video, and high-speed data solutions across the Americas market. In this article, I will discuss how this new world of triple play convergence has become a reality, how successful IP triple play platforms can be created, and how to make the right technical and business decisions to ensure success in your own triple play deployments.
Five years ago, some of the largest triple play service providers in the world today, like FastWeb, barely existed. Incumbent telcos were only slowly investing in next-generation technologies such as Voice over IP (VoIP) to migrate away from expensive and inflexible TDM-based equipment. After the crash of the technology bubble of 2000, it took some time for incumbent service providers to begin to see the business benefits of these new technologies. And it took a while for the average consumer to understand the true value of these new services.
But that is what is happening right now. Telcos are actively investigating or rolling out IPTV (also called telco TV) and IP Video on Demand (IP VoD) services. The more innovative incumbent MSOs, like Comcast, are heavily marketing video calling services such as video voice mail. These video providers are also enjoying success deploying traditional primary line voice services. Wireless providers are now looking at video services. And even municipalities are getting in on the act, deploying greenfield fiber or broadband wireless networks with triple play service bundles. Todays success stories show us that a converged network has both business and psychological advantages. On the business side, IP-based networks are less costly to finance and operate, and new service bundles generate increased revenues. But even more important is the view that these new service bundles foster long-term relationships with customers, reducing customer churn (and therefore reducing the costs of attracting, keeping, and bri nging back customers) and increasing adoption rates for new services.
IP triple play, which is the combination of voice, video, and high-speed data services from one provider, is the first example of myriad potential services that demonstrate the value of an integrated bundle. But more than just getting these three services from one provider on one bill, it is important to understand the key value points that make this integrated package so attractive to consumers. Below I list the critical ingredients of the solution and then discuss them one at a time:
1. Integrated subscriber experience.
2. Converged and scalable network equipment.
3. Simple, yet sophisticated management system.
4. Service creation capabilities.
5. Multiple access technologies.
6. Flexible business models.
7. Aggressive marketing and consumer education.
1) Integrated subscriber experience. The biggest change in the mindset of service providers today is how a service needs to adapt to consumer behavior, rather than consumer behavior adapting to new technologies. The best example of this is the new TV Portal or Home Kiosk products being offered by triple play service providers. Combining the best features of a menu-driven digital TV display with a cell phone-like interface, these TV portals provide an integrated subscriber experience that consumers understand within seconds. Instead of being forced to get up from your favorite TV show every time the phone rings, the TV portal displays the caller ID on the screen, and gives you a chance to send unwelcome callers directly to voicemail. Subscribers can also check called or caller lists and even dial from the TV using a normal remote control (the calling party then picks up a nearby connected phone). All of the communications and entertainment equipment (TV, phone, remote control) remains the same except f or a new IP set-top box connected to a broadband access device. To extend the capabilities of the TV family interface, a similar subscriber portal is offered on the PC individual interface, which takes advantage of the resident mouse and keyboard to offer a greater level of control of the service (for example, setting up call forwarding rules to send calls to your vacation home; or programming the phones not to ring past a certain hour).
2) Converged and scalable network equipment. The experience of the network operator should also be integrated. Todays new multi-protocol SIP/MGCP/ H.323 softswitches are much easier to manage than legacy TDM switches. The provisioning interfaces and dial plans have much greater flexibility too. Combine this with IP video equipment and media servers, and you have a next-generation head-end/central office that serves all of your voice, video, and data needs. A legacy TDM switch upgraded with an IP gateway card will not suffice. And neither will a call control agent imbedded into a media gateway. To be able to deploy future IMS and TISPAN compliant services, the transport, call/media control, and application layers must all be disaggregated and have the ability to be distributed without regard to any geographic barriers. This is the only way to deliver a scalable multi-service platform that can grow to millions of subscribers, and across many different access technologies.
3) Simple, yet sophisticated management system. Equally important to converged network equipment is an Operations Support System (OSS) that can effectively manage all the different services in an integrated way. This means single data entry for voice, video, and data subscriber services, plus rating and billing for these services. Also, the service provider should have no limits to cross-bundling programs (for example, providing one free VoD movie for every 100 minutes of VoIP talk time). San Jose State University, rolling out triple play campus services this Fall as part of their Campus Village project, is a good example of this. SJSU defined three service levels (basic, silver, gold) that includes increasing levels of cross-bundling (e.g., gold service includes high-speed Internet, unlimited local and long-distance calling, a wide selection of IPTV channels, a package of free VoD movies, and unlimited access to the gaming center). Studies show that the more you bundle services, the less price-sensit ive your customers become. With this in mind, the OSS can become a powerful weapon that uses different billing schemas to further cement customer loyalty. In our experience, an easy-to-use but sophisticated management system is as important as the equipment that enables the service.
4) Service creation capabilities. Related to the OSS system is a service creation environment that allows you to rapidly define and roll out new services. This requires a flexible object-oriented environment that allows you to create decision trees and workflows to define a new service simply by dragging and dropping and linking known service objects. Some of the better service creation tools also have service simulation programs that can help you predict profitability for new services before you actually deploy them. And since this service creation environment is tied to the subscriber portal, new service promotions can be delivered as TV menu pop-ups, which subscribers can select and provision through the push of a button on the remote control. Studies have shown that subscribers are ten times more likely to sign up for a new service if they are not forced to write down a number, call a call center, or search on the Web. Finally, an IP service creation platform should allow you to easily roll-out a ra nge of subscriber services that go beyond the basic triple play (e.g., gaming, video calling, distance learning, e-medicine, etc.). We have even seen some municipalities in the United States already begin to use their city-wide IP network to intelligently control traffic lights, security cameras, and utility meters remotely.
5) Multiple access technologies. One of the key lessons from successful deployments is that the choice of access technology does matter, but not to get too committed to just one form of broadband access. An example can be drawn from our European neighbor, FastWeb, where the original business plan called for FTTx as a high-bandwidth medium for triple play. Today FastWeb is about half fiber and half DSL. There are some trade-offs of course. Fiber provides almost unlimited bandwidth and therefore does not force you to choose among competing high-bandwidth service bundles. Fiber also has the advantage of allowing the service provider to deploy lower cost MPEG-2 video compression (IPTV for about 4 MB/s; HDTV for about 20 MB/s). On the other hand, while DSL requires more costly MPEG-4/H.264 video for multiple IPTV channels (IPTV at about 2 MB/s and HDTV for about 4 MB/s), it can also take advantage of existing telco copper and save millions on fiber last mile construction projects. Similar lessons can be applie d to wireless last mile technologies, as WiFi/Mesh/ WiMax technologies could be considered replacements for or enhancements to todays fiber/DSL/cable architectures.
6) Flexible business models. Another lesson learned is that triple play service providers should be open to different business models. For example, you may or may not decide you want to own all of the next-generation equipment. In the United States, some innovative application service providers (ASPs) are providing triple play services across a fiber network built and run by the city of Provo, Utah. With triple play, there exist a multitude of different business models when you consider who owns the network, the application servers, the access technologies, the customer premises equipment, the marketing relationship with the subscriber, customer care, etc. The supply-chain possibilities are endless. In addition, triple play service providers targeting the residential market may decide to offer business services such as IPCentrex to businesses passed, and vice versa.
7) Aggressive marketing and consumer education. A final recommendation for deploying successful triple play solutions is to not overlook the marketing and education required to get subscribers attention and compel them to use the new service. Marketing ensures the greatest possible uptake of new services and allows you to lock in new customers before your competitors do. Further, together with targeted education programs, it gives new subscribers the confidence and comfort to work through the inevitable kinks that will arise in any new triple play deployment. A good example is the program iProvo put together, where they combined advertising, DVDs promoting the new services, community question and answer meetings, and door-to-door get the word out campaigns for maximum visibility and customer acceptance.
IP triple play services are viable and profitable today. However, in this new open competitive environment were traditional rivalries are intensifying and new entrants are threatening incumbents, making the right technical and business decisions will be the difference between success or just survival. IT
Brian Mahony is the vice president of marketing for NetCentrex, Inc. and currently leads marketing efforts for the IPlay3 Consortium, dedicated to promoting the benefits of integrated triple play solutions. For more information, please visit www.netcentrex.net or www.iplay3.com.
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