Triple Play. One Stop Shop.

Triple Play. One Stop Shop.Trends & Prospects for Operator Bundles

Ian Fogg, Senior AnalystJune 2006

2 © 2006 JupiterResearcha division of JupiterKagan, Inc.

Agenda

1. (very) Brief Background about JupiterResearch

2. What Drives Providers to LaunchTriple Play and Multi-Plays

3. Consumer Interest in TV, Broadband & Telephony Bundles

4. Positioning VoIP: ‘Unfix’ the Home Phone


Background: About me

• Coverage at JupiterResearch: “European Broadband & Consumer VoIP”

– Broadband: DSL, LLU, cable, WiMax, WiFi etc.– VoIP & Personal Technology– Emerging Platforms

• Business advice on current & future products• Prior experience includes:

– 3g / UMTS mobile, digital cable TV, PDAs.

• Based in London, UK.– http://weblogs.jupiterresearch.com/analysts/fogg/


About JupiterResearch

• Perspective, Context, Analysis, Advice• Business advice on new markets• Numerous forecasts, covering:

– W Europe: 17 countries, including Ireland– CEE: further 10 countries– US

• Based on primary consumer data• Both syndicated subscription research

& custom research & consulting


The ‘Vicious Competition Circle’ Driving New Bundled Offers

Source: JupiterResearch 6/2006

Lower Prices& Revenues:- Broadband- TV- Voice- Mobile

ProvidersDiversify:- Overseas- IPTV- VoIP- Mobile / MVNO

New Competitors:- for cable & satellite TV- for incumbents telcos in voice- for mobile ops- for ISPs

Regulators EnableNew Opportunities

(LLU, MVNO, etc)

Operators Feel Pressure to Create

Cheap Bundles


Broadband Enables this Competition Crucible in the Digital Home & Outside

Source: JupiterResearch (6/2006)

Fixed Telephony Digital Home

Mobile Television

SatelliteTV Ops

?CableOps

CE Makers

A summary of European operators’ multi-play strategies

Arrows indicate major diversification paths

Broadband

HistoricTelecom

Ops

Alternatetelcos

ISPs

Mobile Ops


Today, Household Broadband IsAlready Mainstream in Key Markets

> 40%30 - 39%20 - 29%10 - 19%< 10%

Householdbroadband

penetration 2005

Source: JupiterResearch Internet Access and Broadband Model, 5/06 (Western Europe only)

52% of all householdsin Netherlands and Denmark

have broadband


0%

10%

20%

30%

40%

0% 100% 200% 300%

33% ofdial-up usersunwilling topay more for

an ISP service

Operators Are Looking Beyond Broadband as Broadband ARPU’s Fall to Drive Growth

Source: JupiterResearch Internet Access and Broadband Model, 5/06 (Western Europe only); JupiterResearch/Ipsos Consumer Survey (9/05), n = 1,571 (narrowband users, France, German, Italy, Spain, Sweden and UK)

Per

cen

tag

e D

eclin

e in

AR

PU

200

4 to

200

5

Broadband Growth 2004 to 2005

Ireland

Greece

Rising broadband availability is the main factor in these two immature markets.

The Correlation Between Broadband Growth and Broadband ARPU Decline


Bundles Have Low Appeal for Today’sDial-Up Users, Unless there is no Extra Cost

33%17%

2%4%4%5%5%

8%8%9%

14%20%

28%

0% 20% 40% 60% 80% 100%

None

Don't know

Bundled mobile telephony package

Bundled digital TV package

Bundled fixed-line telephony package

Percentage of Narrowband UsersQuestion: Thinking about your current Internet service provider,which of the following features could motivate you to switch to a more expensive package? (Select all that apply.)

Source: JupiterResearch/Ipsos Consumer Survey (9/05), n = 1,571 (narrowband users, UK, France, Germany, Spain, Italy, and Sweden only)

Motivating factors for dial-up users to spend more on a package from their ISP

Just 12% ofdial-up usersinterested in a

bundled package


Examples of Providers Using Multiple Platforms to Reach Consumers,NOT the classic Triple Play

• Cable Companies:– UPC/Chello NL trialling DSL & launching an MVNO– ntl UK now owns a DSL ISP, Virgin

• Satellite TV Operators:– BSkyB bought DSL LLU provider, Easynet for fixed VoIP, broadband

and IPTV services– CanalSat & TPS offering TV over DSL in partnership woth France

Telecom, Free and other French DSL ISPs• Telecoms:

– Swisscom offering mobile TV on Natel and IPTV via Bluewin,and buying into cable service with Teleclub stake

– BT launching fixed VoIP and an MVNO– TDC and Portugal Telecom continuing cable TV and DSL in parallel.

Former also launching IPTV on DSL.– Fastweb operating fibre to the home, while extending DSL reach.– France Telecom re-branding their ISP Wanadoo to Orange



Operators are Becoming Platform Agnostic and Customer-CentricFig x: Provider Strategy Choices in Europe

Provider‘plays’

+ BUSINESSBROADBAND

Source: JupiterResearch 6/2006

The New Multi-Play:1. Communication2. Entertainment3. Access data

Brand(s) StrategyMust Deliver


28%

14%

4%

10%

10%

14%

19%

19%

28%

24%

0% 20% 40% 60% 80% 100%

None of the above

Don't know

Bundled telephone service

Bundled broadband

Bundles Work Better for TV Operators than for Telecoms Operators

Percentage of Consumers without Cable/Satellite DTVQuestion: Can you tell me which, if any, of the following factors would persuade you to switch to cable or satellite digital TV? (Please rank top three.)

Source: JupiterResearch Consumer Survey (9/04), n = 3,054 (France, Germany, Italy, Spain, Sweden and UK only)

Consumers’ Reasons to Switch to Digital cable or satellite TV

(cheaper than purchased separately)

(cheaper than purchased separately)

Bundles AppealMuch Moreas a Hook

For TV Upgrades


Telephony Bundles Appeal Most to Broadband Users; VoIP Enables

27%

8%

5%

5%

9%

10%

10%

14%

16%

17%

17%

21%

37%

0% 20% 40% 60% 80% 100%

None

Don't know

Make video telephony calls

Bundled audio content (e.g. music)

Bundled video-based PC content

Make cheaper tel. calls using a normal phone

Make cheaper telephone calls using my PC

Percentage of Narrowband UsersQuestion: Thinking about your current ISP,which of the following features could motivate you to switch to a more expensive package? (Select all that apply.)

Source: JupiterResearch/Ipsos Consumer Survey (9/05), n = 2,009(broadband users, UK, France, Germany, Spain, Italy, and Sweden only)

Just 16% ofbroadband users

interested in abundled package

Motivating factors for broadband users to spend more on a package from their ISP

At low end user cost,VoIP Enables this:


Platform-neutral

Telcoswitchednetwork

Broadband

ISPs Have Control over Customer Relationships and Much (but Not All) of the Platform

+

+

OptionalPSTN

backup

VoIP in the Home Last Mile Call Routing

ISP/telcoIP network

Broadband

CO

PublicInternet

PublicInternet

Provider-controlledplatform


Note: “CO” means central office.


Location-Free Appeals To ConsumersFixed Operators Must Unfix the Home Phone

21% of consumerswould regularly

divert their home phoneto their mobile17% interested in

PC-basedVoIP telephony

regularly

27% of consumersinterested in regularly

using their mobilein place of their

home phone

Question: Thinking about your use of the Internet during the past year, which of the following activities did you conduct online monthly or more frequently? (Select all that apply.) Thinking about the way you communicate, if you had the option, which of the following would you be interested in doing on a regular basis (at least a few times a month)? (Select all that apply.)

Source: JupiterResearch/Ipsos Consumer Survey (9/05), n = 4,288 (online users, UK, France, Germany, Italy, Spain, and Sweden only)


For ISPs, Hybrid VoIP Services ThatUnfix The Home Phone Will be Critical

PC

-ba

sed

Last-Mile Broadband TelephonyEvolutionary and controlled platform


Independent Internet TelephonyDisruptive and platform-neutral

Ph

on

e-b

ase

d

BT Communicator, Bluewin Phone, freenet, PlusTalk,T-Online Internet-Telefon

Gizmo, Google Talk, MCI Web Calling for Windows Live (via Windows Live Messenger), sipgate, Skype, Vonage (softphone), Yahoo! Messenger

AOL Talk (US), Dixons’ and Springvox’s freetalk, PhoneGnome, sipgate, SIPphone, voipGate, Vonage

AOL Phone (Germany), Bredbandsbolaget (B2), BT Broadband Talk, cablecom (broadband phone), Free, freenet, NextGenTel, PlusTalk, Wanadoo Wireless & Talk

Note: All services named are examples only; services offering options for hybrid PC and phone experiences are shown in blue type.


Broadband-Powered Competitors Will Co-Exist with Operators’ VoIP

Customers

ISP

Internet

Web browserToolbars (e.g., Google, Skype, Yahoo!)Branded browsers (e.g., MSN Explorer)

Desktop software(e.g., AIM, Google Desktop Search/Pack, iTunes, MS Messenger, Skype, Steam)

Internet access

ISPWeb site

ISP managed Retailed/unmanaged CPE

Distribution of otherfirms’ products

(e.g., e-mail, IM, search)

The Broadband Value Chain and an ISP’s Role (in red) :



Some of the Relevant Recent Reports• Independent Internet Telephony

Build Consumer VoIP Propositions on Services, Not Just on Price• ISP Package Features

Target Novice Users as a Foundation for Later Upsell• Broadband Home Gateways

Build the Foundations for Provider Multi-play Strategies• European Digital Music Value Chain

Making the Most of Small Margins and High Costs• Home Entertainment Networks in Europe

Targeting Audio Networking Adopters, While Video Networking Remains Nascent

• Consumer-Created ContentAssessing Influence of Content-Contributing Online Consumers

• European Broadband Access Forecast 2006-2011Understanding Revenue Risks as the Broadband Market Matures

• The Broadband Trojan HorseLearn to Live with ISP Disintermediation

• European Online Advertising Forecast, 2005 to 2010Responding to the Rise of Digitally Empowered Consumers

• Online Video in EuropeStrategies for Necessary Integration

• European Media Consumption Consumer Survey, 2006



Thank you

[email protected]

http://weblogs.jupiterresearch.com/analysts/fogg/http://www.jupiterresearch.com/

Triple Play. One Stop Shop.

Technology

Transcript of Triple Play. One Stop Shop.