Logo
BodyBGTop
Getting Bundled Up Isn't Heating Telecom Revenue
"Triple-play" subscriptions will shoot up 52 percent in 2007, but in the short term it will not boost the industry's profit margins.
Posted Oct 3, 2007
Page 1



The number of global "triple-play" subscriptions -- cable, Internet, and telephone service bundled together in a combined package -- is expected to increase by 52 percent this year, to more than 34 million, according to a report released by Pyramid Research, a consultancy specializing in the communications, media, and technology industries. While consumers continue to gravitate to combined packages, it appears that triple-play subscriptions are failing to lift revenues in the short term for the telecommunications industry. The bundled-offer uptake is largely attributable to price slashes and promotions, according to Dan Locke, a Pyramid Research analyst and coauthor of the report, "From Triple-play to Quad-play: Strategies, Business Models, and Best Practices." "A review of triple-play offers from a range of service providers shows that bundle discounts can be as high as 50 percent off the sum of the unbundled prices of each service," Locke writes. "Traditionally, discounts have been largely driven by the competitive context of a market; strong competition in the U.K. and France, for instance, has led to significant price declines for triple-play bundles." However, the report contends that, when compared with cable players operating one network, telecom companies receive a smaller number of multi-play efficiencies. Moreover, the research firm says that adding a TV offering raises operating and capital expenditures -- known as "Opex and Capex" -- and dilutes 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 in a statement. The report also notes, though, that drawing a complete conclusion pertaining to bottom-line impact of multi-play would be premature, considering that most IPTV-driven bundled offerings have been on the market for less than two years. What's more, the research firm added, content strategies crucially affect margins: Telecom companies that acquire unique content to differentiate their services will unsurprisingly have higher costs than those with a lighter, more partnership-oriented content approach.
"Admittedly, many operators are experiencing growth as a result of triple play," Locke writes. "For example in the U.S., Comcast's [average revenue per user] has grown 3 percent quarter-on-quarter over the past two-and-a-half years, reaching over $101 per month in 2Q 2007. Nevertheless, to encourage multi-play uptake, differentiation of services has to go further than pricing. Few customers would subscribe to services that do not deliver much value to them, or if they do, they become prime candidates for poaching by competitors. Simply put, for triple plays to win meaningful uptake and customer loyalty, each service, particularly broadband and video, has to be desirable on a standalone basis. In this context, network capacity, available bandwidth, and content become important variables for differentiation." Related articles: Catering to the Multiplay Consumer Amdocs unveils version 7 of its CRM suite, a solution designed to enable service providers to deliver an improved customer experience in the ever-converging world of communications. Households Fancy One-Stop Communication Shops Consumers prefer to buy bundled services when it comes to purchasing home communication packages. Connecting With Consumer ISPs A report says the growing industry competes on features as well as price, providing customers with numerous access choices. Communications Customers Want the Total Package U.S. households are increasingly subscribing to bundled services from telcos and cable providers; IDC sees the market doubling by 2010. Call Your Mother Wireless carriers' family calling plans are increasingly popular with customers; pricing is an important factor.
Page 1
To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
Learn more about the companies mentioned in this article in the destinationCRM Buyer's Guide:
{0}
Search
Popular Articles
 

BodyBGRight
Home | Get CRM Magazine | CRM eWeekly | CRM Topic Centers | CRM Industry Solutions | CRM News | Viewpoints | Web Events | Events Calendar
DestinationCRM.com RSS Feeds RSS Feeds | About destinationCRM | Advertise | Getting Covered | Report Problems | Contact Us