The need for more revenue - what’s a service provider to do?

Just in case you haven’t heard, triple play services offer voice, video and data services from one provider over one line. Sounds like something you’ve heard before?

There’s been much talk of the triple play over the last 6 to 9 months in the telecom industry.  Is this just an overhyped vision that isn’t needed in the market?  Or is the timing right to truly offer triple services?  Just in case you haven’t heard, triple play services offer voice, video and data services from one provider over one line.  Sounds like something you’ve heard before?  What’s different this time is that these services are provided over DSL or cable modems to the consumer market, and the multicable system operators are already hitting it hard and fast.

Many telcos are faced with driving more revenue out of existing infrastructures and existing customers, or trying to add new customers altogether. This presents a flipside of reduced capital spending. Although capital is required for triple play services, most can be accomplished with enhancements to existing infrastructure, as opposed to all out replacement of current network equipment.

Why is the time now?  The cable companies are truly aggressive competitors; they are on a mission to own a greater or total percentage of the consumer’s entertainment and communications wallet.  We already know the following:

  • Cable modem usage for high speed Internet access greatly surpasses DSL usage in the U.S.

  • Over 1.5 million consumers already use cable telephony for secondary and primary line connectivity.

  • Cable MSO business case models support the triple play business model.

  • A truck roll has always been part of the equation - MSOs do not fear the truck roll, and it’s considered a normal line item in their business model.

  • A set top box is part of the solution.

  • Doesn’t have to be completely subsidized; consumers will pay a rental and installation fee.

  • A set top box creates a portal into the home to offer additional services such as Video on Demand.

The cable companies have made a substantial dent into the service providers’ franchises already with cable modem service.  A successful triple play offer will cause telcos to lose primary POTS service to many customers.

Telcos should fear this consequence.  Although many may argue that cable faces an uphill battle with getting customers to switch POTS lines, we would argue if the service works and the price is right consumers will do so.  Service providers aren’t the only ones looking to lower monthly operating expenses (consumers are too).  Once that switch occurs, what would make a consumer go back when the telco finally gets around to offering such services?  We’re hard pressed to answer that question.

We understand that this isn’t an easy step for telcos.  Content has always been a stumbling block in the service provider mindset - who owns it, who manages it, how do you secure it, how do you continually refresh it?  The good news is that there are many companies in the market who can help related to video over DSL – head-end equipment vendors, middleware vendors, security vendors, etc. - so you are not alone.  We also understand that current regulation isn’t favorable to such a decision.  But at what point will you have waited too long and lost an even greater percentage of your market to the MSOs?

The time is now.  Many rural and smaller independent operating companies have already launched and are seeing great success in customer adoption and business case return on investment.  This is where the innovation is in today’s market for these services.  The telco giants need to take a lesson from the little guys in order to protect their investment.

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This story, "The need for more revenue - what’s a service provider to do?" was originally published by The Edge.

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