A funny thing happened on the way to telco revenue optimization – residential users have become more sophisticated and more willing to spend money.
It used to be a simple fact of the telecommunications and IT business that the term “business class” meant something very specific and tangible. Specifically, it meant that a device or a service or a platform was more capable, more robust, and simply put, better – with an ability to provide a predictable, reliable and measurable class of service. The term is so ingrained in our minds at this juncture that it’s hard to even explain. Think of it like an airline, where you just know that the First Class seats have the better salad dressing and nicer napkins.
Of course, the converse of “business class” – consumer grade – used to mean just the opposite. “Good enough,” “best efforts,” “a different segment of the price/performance curve” – all of these terms would have described a consumer grade product or service. The “economy class” of the telecom industry, if you will allow us to continue the analogy.
But a funny thing happened on the way to telco revenue optimization – residential users have become more sophisticated and more willing to spend money. The result is turning the business vs. consumer dynamic on its head.
An easy example comes from the PC world. It wasn’t all that long ago when a business class PC came with features unknown to the home PC world – like Ethernet Network Interface Cards, Optical disc recorders and the like. Now, of course, it’s much more likely that the home PC – particularly one in the home of a Media Enthusiast or a Gamer – is going to have features that the vast majority of enterprise PCs just don’t have. In many ways, the state of the art has shifted from the business class PC to the consumer PC.
Looking at the broadband services world, we’re beginning to see a bit of the same shift. Residential users are doing more than just Web surfing and casual e-mail on their broadband connections. VoIP services – including, increasingly, those offered by telcos like SBC – are reaching hundreds of thousands of customers and gaining momentum. Online gaming is drawing users in the hundreds of thousands. Movie download services like Movielink (which recently logged its millionth download) are paving the way for more advanced video services – as are the literally dozens of telcos pursuing TVoIP strategies. And of course, home offices are bringing all of the traditional “business class” broadband apps into the home.
What this means is that residential broadband services are really starting to require their own unique level of service that rivals that of business services. In fact, we’d go so far as to say that “residential class” services will become as complex and require QoS metrics just as rigorous as today’s business class services. There will be differences, no doubt – residential class QoS will probably require different latency, throughput, uptime, MTTR (mean time to repair) metrics than does business class QoS.
We may even see some entirely new broadband QoS metrics appear (relating, perhaps, to “lifeline” services in a broadband environment, or to broadband-enabled security services). Or the same old metrics will exist, but they’ll be packaged differently – in consumer-friendly terms like “call reliability” or “gaming performance.” We’ve not seen any providers begin to really codify performance guarantees for their residential service customers, but we are sure that they need to. At a minimum, providers are going to want to offer service guarantees for IP services that they offer directly or through partners – and longer term, they may be able to find a way to monetize service guarantees even for services (like Vonage, for example) that are offered by third parties.
The bottom line is this – today’s best efforts for residential class service aren’t going to cut it moving into the future. Not only will consumers want SLAs, but don’t be surprised if the residential metrics exceed the requirements for business. Smart providers already know this – and the standards bodies have been prepping for an IP SLA environment for years — but we’ve yet to see any kind of an official residential SLA policy that really defines what it takes to offer this QoS-enabled residential service in a broadband household. Providers who really want to win in the consumer space should find a way to incorporate a residential SLA into their broadband offerings, especially as they begin to move towards higher-speed fiber or ADSL2+/VDSL2 services.
