Multi-play: New supply-side strategies

IDATE, April 2012, Pages: 115

Bundles, content, smart access, segmentation

This report takes a look at the major developments in services being bundled with Internet access. It analyses trends in triple and quadruple-play bundles, their convergence and their economic impact on vendors. It also explores deep product line strategies: digital home, rich communication, secure access, and opportunities tied to segmentation.

Report's key questions

- At a time when telecom markets are stagnating, what possible growth outlets are there for telcos?

- What are the major innovations in the area of services bundled with access: additional services, content, smart access, segmentation?

- What are the assets and limitations of bundling strategies? How do bundles affect ARPU, margins and customer loyalty?

- Will adding content to the equation bring growth and, if so, for which type of operator?

- Is enhancing access with other services closer to telcos’ core business a sound development strategy?

- Is segmentation operators’ main strategy for handling the explosion in traffic on the networks?

- Can telcos sell quality of service?

1. Executive Summary

2. Methodology

3. Introduction
3.1. Background and objectives
3.2. Key factors in supply-side strategies
3.2.1.Technlogical developments
3.2.2. Structure of demand
3.2.3. Increased competition
3.2.4. Economic situation
3.2.5. Regulatory situation
3.2.6. Telcos’ market objectives

4. Service bundles
4.1. Definition: cross-selling & bundles
4.2. Usage: bundling is a market reality
4.3. Vendors positioning on quadruple play bundles
4.3.1. Changing positions
4.3.2. Vendor’s positioning with respect to the quadruple play
4.3.3. Bundling strategies by type of vendor
4.4. The triple play
4.4.1. Triple play as industry standard and the gradual disappearance of standalone offers
4.4.2. Examples of triple play bundles
4.5. The quadruple play
4.5.1. Quadruple play bundles still a novelty
4.5.2. Examples quadruple play bundles
4.6. Analysis of bundling strategies
4.6.1. Triple and quadruple play pricing strategies
4.6.2. Bundles’ economic impact on ARPU, churn and margins
4.6.3. How far can existing customers be monetised?
4.6.4. Perspectives: IPTV’s role in triple and quadruple play bundles, and the search for convergence

5. Access + content strategies
5.1. Definition
5.2. Operators’ positioning on offers that include content
5.3. Must-have services
- Premium TV
- VOD
- PVR
5.4. Content that lends an edge
- Music
- Games
5.5. Packages that combine different types of content
5.6. Strategic analysis: integrator, aggregator or provider of quality access: which is the way to go?

6. Smart access
6.1. Introduction
6.2. Rich communication
6.2.1. Services bundled with landline calling
6.2.2. Rich mobile communication
6.2.3. Location-based services
6.3. Digital home
6.3.1. Access to content
6.3.2. The home network
6.3.3. Remote access to the home
6.4. Secure access
6.4.1. Storage and security
6.4.2. Insurance
6.4.3. Payment
6.5. Opportunities in services close to telcos’ core business, with prospects for bigger margins and an edge over the Internet giants

7. Segmenting services
7.1. Segmenting access solutions to monetise the network
7.1.1. Usage-based billing
7.1.2.Speed-based billing
7.1.3. QoS offers
7.1.4. Capping traffic to educate users
7.1.5. Market opportunities tied to the type of network, and a niche target market
7.2. Family offers: targeting individuals and their circle to secure loyalty
7.2.1. Multiple-line solutions
7.2.2. Packages for typical families
7.3. Targeted offers for different segments of the population
7.4. Trend: segmentation, a vital challenge

8. Conclusion: several points of leverage

9. Player profiles

Company presentation and line strategy for:
- Comcast
- FastWeb
- Free
- Orange France
- SFR
- Verizon
- Virgin Media UK
- Vodafone Spain
- Telecom Italia
- Telefónica Spain

IDATE has released a report that provides a detailed analysis of the global market for bundles and services sold with internet access. It will enable readers to deepen their understanding of game-changing developments – exploring key issues and current trends: bundles, content, smart access and segmentation.

“Smart access services are the services associated with ISPs’ core solutions, such as rich communication, digital home and secure access. They all represent high-margin opportunities for vendors and involve services related to their core business, along with vital assets when going head to head with internet giants. Operators can draw on their existing customer base and network functionalities”, says IDATE consultant, Sophie Lubrano, the Project Manager for this report.

Smart access

Value-added services bundled with operators’ core solutions

The smart access category of services includes those that create value-added for operators’ core solutions: landline telephony, mobile services and internet access. They are relatively close to operators’ core business and cover various arenas:

- “Rich communication”: all services tied to telephony, mail/messaging and instant messaging on wireline and wireless networks, along with location-based services.
- “Digital home”: all services that enable the various devices in the home (phone, PC, TV, etc.) to access wireline and wireless networks and customers’ content. The digital home also includes home network and remote management systems.
- “Secure access”: services tied to security and storage, along with insurance and payment, on both wireline and wireless networks.

Opportunities in services adjacent to their core business, with prospects for healthy margins and the ability to leverage assets when sparring with internet giants

“Smart access” services represent an opportunity for added income and solid margins for operators, and offer several advantages:

- Unlike content, they do not require partnerships with market leaders, except for payment systems. This means that operators can enjoy a sizeable margin.
- The margin can be relatively high on storage and security services, for instance, whose running costs are low.
- Smart access services are a natural progression for an operator’s business and do not require any major upgrade of sales/marketing teams.
- The billing tie is a crucial element: of all the major internet companies, only Apple and Amazon have managed to create a lasting billing relationship with users. The ability to invoice subscribers and have a relationship of trust with them is a vital part of operators’ business.

Ultimately, then, operators have major assets when it comes to these services and can leverage the existing trust-based relationship they have with internet users, deliver solutions that are close to their core business and generate healthy margins. But they are having to compete with top internet players who are working hard to occupy these positions, especially when it comes to communication services, cloud computing and home network solutions.

- Comcast
- FastWeb
- Free
- Orange France
- SFR
- Verizon
- Virgin Media UK
- Vodafone Spain
- Telecom Italia
- Telefónica Spain

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