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Viewing report
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Bundles of Services, Double, Triple, Quadruple Play?
IDATE, Dec 2005, Pages: 200
At a time when new offers are being launched close on the heels of their announcement, this market report provides in-depth analysis of the services being rolled out by operators – incumbents, cablecos and ISPs – and the way that they are positioning bundles within their strategies.
- Overwhelming trend of a move towards triple play, and eventually quadruple play bundles
- The need for operators to design a distinctive service line, with bundled services as a key to their success.
- Offers that are complicated to implement: product lines that are both broad and deep, with services associated with each component of the triple play (telephony, TV, internet access).
Increasingly ubiquitous triple play…
At a time of increasing competition, operators – whether incumbents telcos, cablecos or ISPs – are all actively seeking new growth paths to compensate for lost revenues in their core business area. All of the players have chosen to forge themselves a position in new markets: internet access, Voice over IP, and later IPTV for incumbents, VoIP and IPTV for ISPs, voice and internet access for cablecos. This means that in the consumer market now, telcos, ISPs and cablecos are likely to be going head to head on all three elements that make up triple play bundles: telephony, internet access and TV. The strategy that an operator adopts depends on a range of factors, notably their market positioning and their marketing objectives. Regardless of their background, however, players across the board are now entering into triple play strategies: virtually all of the players have already launched or are planning to launch an offer, whether in a bid to gain market share with an innovative offering, or in response to the competition’s existing offer.
…but market demand currently focused on the double play
As it stands, triple and quadruple play offers are part of an emerging market, and the marketplace is not yet mature enough for this type of offer. The bulk of current demand is for double play offers that include access: TV + internet access or telephony + internet access. The broadband market’s growth potential is undoubtedly fuelling this phenomenon since it is relatively easy for an operator to market internet access along with its core offer. Plus, the internet market is still quite new, and consumers do not yet associate the service with a particular type of player, like they do with television or telephony. Operators will therefore need to make major efforts on the marketing end of things to educate and convert users to the triple, and later quadruple play.
Significance of national situations
The state of competition in a given market will naturally have an impact on operators’ commercial strategies. The most highly competitive markets are the ones where bundles are enjoying the healthiest growth momentum. In the US, in the Telecom Act environment which was marked by the reintegration of long distance services, the RBOCs have been able to handle the swift decline in their landline telephone base by adopting a proactive stance on bundling over the past three years. In the residential market, SBC reports that at the end of the first half of 2005, 66% of its residential customers were subscribing to an additional service (long distance calling, DSL, wireless/Cingular or video) on top of their basic subscription – compared to only 54% one year earlier. ARPU too was up: by 4.6% on the year.
Two bundling strategies
Bundling strategies can be broken down into two distinct approaches:
- Horizontal bundles (double, triple and quadruple play), which aim to combine different services within a unified package (internet access, TV and telephony), as part of a broad line strategy;
- Vertical bundles, which involve developing value-added services around a core service (internet access, TV or telephony), as part of a deep line strategy.
Advent of the quadruple play?
In a bid to create a distinctive offer and keep subscriber churn to a minimum, a growing number of operators are now examining the possibility of developing quadruple play offers, which will add mobile services to their existing triple play bundle. American operators are pioneering the trend. Baby Bells, SBC, Verizon, BellSouth, Qwest and Sprint have already rolled out quadruple play offers which are marketed either under their own brand or in partnership with satellite or mobile operators. In the UK, NTL may well be the first European player to enter the fray, following its takeover of Virgin Mobile. After having merged with its top rival, Telewest, NTL was already poised to become the UK’s top cableco, and a major player in the bundles market (internet, TV and fixed telephony). Its takeover of Virgin Mobile adds mobile calling to the mix, and so the possibility of unveiling a singular offer.
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