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North American Triple Play Outlook
Frost & Sullivan, April 2005
Triple Play to Influence Competition between ILECs and MSOs
As multiple system operators (MSOs) and incumbent local exchange carriers (ILECs) battle it out to win over subscribers, a triple play strategy that bundles voice, video, and data services can be a key determinant of the consumer’s final choice. While ILECs’ competitive strength lies in traditional voice services and the ability to combine a wireless offering in the bundle, a triple play strategy offers MSOs the opportunity to leverage their better video position, and combine that with broadband Internet and new voice services. With an adequate network in place, MSOs also have the advantage of a better starting point for services such as video. ILECs need to focus on their bundling strengths such as innovative price cutting tactics, wireless services, and integrated home/work offerings that leverage their business customer relations.
This Frost & Sullivan research covers the competitive positioning of US and Canadian ILECs and MSOs and their current and future strategic plans regarding triple play. It investigates the impact of these new entrants in both the video and voice markets from both the end user and the service provider perspective, and examines the strategies, expected deployment plans, and capital expenditures associated with triple play services. Analysis of various triple play product offerings and bundling tactics will provide service providers with valuable insights on how to maximize profits through a triple play offering.
A Third Player and not the MSOs Is Likely to be the Main Threat for ILECs in the Long Term
Besides the video vulnerability, ILECs must also be worried about price pressure coming from a third competitor in the broadband access market, which might change the current duopolistic-established price. During the time it will take ILECs to deploy their new fiber infrastructure, there will be many opportunities for the emergence of other players in the market, using technologies such as broadband wireless access (such as WiFi, WiMAX / 802.16 and 802.20) and broadband over power lines.
'A triple play bundle can lower churn, offer up-selling opportunities and will decide how the battle board between ILECs and MSOs will be drawn in the future', say the analysts of this research.
The US and Canadian Outlook
'In U.S. the triple play landscape will be shaped by the competition between the regional bell operating companies (RBOCs) and the MSOs who are expected to substantially increase their VoIP subscriber base'. The RBOCs are themselves divided in 2 camps: the Verizon camp, with its longer-term fiber to the premise (FTTP) plan versus the SBC Communications camp, with its shorter-term fiber to the node (FTTN) strategy. Canada is also slowly catching up on triple play, with ILECs such as Bell Canada and TELUS initially relying on bundling strategies and slower fiber rollouts. Shaw Communications has already launched a VoIP cable service and Rogers is expected to follow suit.
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