The Future of Triple-Play: Growth opportunities, key challenges and competitive strategies

The Future of Triple-Play

Growth opportunities, key challenges and competitive strategies

Report Overview

Cable operations and fixed-line telecoms operators continue their battle over a superior share in the triple-play arena. However, mobile operators have shown their interest in seizing a piece of the market while satellite TV providers are also complementing their core services with fixed-line offerings. The future of pure-play providers appears limited, as the credit crunch places further pressure on consumers to seek the most costeffective way of obtaining the services they need.

‘The Future of Triple-Play: Growth opportunities, key challenges and competitive strategies’ is a report published by Business Insights that examines the market opportunities and challenges for triple-play services. The report analyzes the market conditions that have driven the deployment of triple-play services, and the strategies employed by leading service providers. It identifies the challenges faced by companies, and also provides recommendations into how to best counter competitive threats, extend service portfolios, and boost revenue potential in this rapidly evolving market.

Key Findings

The popularity of mobile telephony is expected to continue to rise over the next four years. There will be over 5.6 billion mobile connections worldwide by the end of 2013, a 68% increase over 2007.

Mobile broadband will be a substitute for fixed-line services in markets where fixed-line infrastructure has not been widely deployed. There will be an estimated 258 million mobile broadband notebook users in 2014, with consumers accounting for almost 200 million of these connections.

It is forecast that there will be 64 million IPTV subscribers by the end of 2012, an almost sixfold increase over 2007 levels.

The average consumer is not motivated by new technological offerings. Price is much more important to most than the availability of advanced services such as VOD, DVRs and high definition programming.

Use this report to

• Understand the market dynamics of the triple-play market with this report’s overview of the market conditions and trends that have driven the deployment of triple-play services.

• Identify the key challenges faced by providers across the triple-play market with this report’s examination of the evolving competitive environment and the ways in which companies are targeting triple-play opportunities.

• Compare different service provider strategies with this report’s in-depth analysis of the triple-play approahces being employed by a number of leading communications providers across France, Germany, the UK and the US.

• Assess future trends that will affect the triple-play market with the market projections to 2012 for key communications and entertainment services including consumer broadband, mobile telephony and IPTV, including a market forecast for triple-play subscriber levels.

Explore issues including...

Demand and fixed-line communications services: Increasing levels of competition across the voice and data access sectors has diminished telcos’ initial advantage showing a decline in demand for fixed-line communications. As a result, telcos have been forced to leverage their network infrastructure to deliver a broader range of applications and services to consumers.

IPTV and digital TV services: IPTV has emerged as a viable fourth platform for digital TV services driven by telcos’ desire to deploy triple-play services in order to reduce customer churn levels and boost ARPU. However, moving into the TV sector is an essential step if telcos are to retain eminent players in the communication and entertainment sector.

Broadband: The rise of consumer broadband brings greater opportunities for triple-play services. Although uptake is continuing apace in less developed broadband markets, others are starting to become slow as saturation point is reached. As a result, average price points for broadband access continue to fall.

Discover

• What are the major trends shaping and influencing the development of the triple-play market?

• Why are service providers investing so heavily in the deployment of triple-play services?

• Which factors are likely to inhibit growth of the communications market, and triple-play in particular?

• What are the key competitive advantages of the main triple-play protagonists?

• To what extent will emerging triple-play providers threaten the current status quo?

• How do the triple-play offerings of major providers across France, Germany, the UK and US differ?

• What are the forecast market growth rates up to 2012 across consumer broadband, mobile telephony, IPTV, mobile broadband and tripleplay services?

• Which future trends will impact on the development of the triple-play market?

Report Highlights

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Table of Contents
The Future of Triple-play
Executive summary 10
Market context: from pure-play to multi-play 10
The competitive environment 11
Service provider case studies 12
The future of triple-play services 13
Chapter 1 Introduction 16
Introduction 16
Who is this report for? 16
Definitions 17
Digital pay-TV (DTV) 17
Digital terrestrial TV (DTT) 17
Internet Protocol TV (IPTV) 17
Internet TV 17
Mobile broadband 17
Mobile Internet 17
Mobile TV 18
Triple-play 18
Video on demand (VOD) 18
WiMAX 18
Chapter 2 Market context: from pure-play to multi-play 20
Summary 20
Introduction 21
Defining triple-play 21
Telcos and cable operators vie for dominance 22
Triple-play market trends and drivers 25
Fixed-lines in decline as mobile takes center stage 25
Combating falling fixed-line revenues 26
Spending on fixed-line telecoms services is falling 27
Mobile telephony penetration continues to rise 29
VoIP offers a low-cost alternative to traditional voice services 32
Broadband uptake is continuing apace 33
Broadband markets reaching saturation point in development markets 37
Broadband pricing under pressure 38
Bandwidth demands will continue to increase 39
TV market in transition 41
The business case for IPTV 41
Strong growth anticipated 42
Regional demand for IPTV 45
Triple-play inhibitors and threats 48
Infrastructure limitations delay rollout 48
The impact of regulation 49
New competitors are emerging 50
Chapter 3 The competitive environment 52
Summary 52
Introduction 53
Competitive pressure reaches new levels 53
More competition on the horizon 53
Changing strategic aims 55
Reducing customer churn is a top priority 55
ARPU becomes the key metric 55
Extending existing customer relationships 56
Comparing the key triple-play protagonists 57
Emphasis of bundles vary according to providers’ key strengths 57
Cable providers are building on video success 57
Building on video strength 58
On the offensive in voice and broadband 58
A short-term advantage in triple-play? 59
Telcos face a steep learning curve and high risks 59
IPTV is a defensive move for most 60
Telcos are playing catch-up in the TV market 60
Fiber network deployment crucial for future competitive positioning 63
Partnering for success; filling service gaps with best-of-breed
providers 63
Taking a content-centric approach could be a step too far 64
Significant challenges remain 66
Taking a consumer-centric approach 68
Triple-play services offer benefits to consumers 68
Bundled offerings offer cost-savings 70
But triple-play services do not always offer best value 72
Uptake on the rise: UK triple-play case study 72
Targeting the right demographics will pay dividends 74
Emerging competitors threaten the status quo 76
Wireless services add mobility to the mix 76
Adding mobility to the mix 77
Mobile broadband further challenges fixed-line operators 77
WiMAX could threaten existing business models 80
Satellite operators excel in TV, but lack fixed-line assets 81
Partnerships are vital 81
Could triple-play success spell the demise of satellite? 81
Web-based video services could divert consumer spending online 82
A disruptive force in the video delivery arena 82
Web-based services benefit from changing market conditions 82
Pay-TV at risk? 84
Chapter 4 Service provider case studies 88
Summary 88
Introduction 89
AT&T (US) 90
Triple-play strategy and developments 90
Forging ahead with fiber deployment 90
Strong TV growth 90
Restructuring reinforces multi-play aspirations 91
Integrated multi-service offerings gather pace 91
Satellite partnerships offer bundling options 91
Advanced services provide differentiation 92
Investment in multi-platform services 92
Operational performance 93
BT (UK) 94
Triple-play strategy and developments 94
A hybrid approach to TV service delivery 94
Bundling restrictions removed 95
Targeting the mobile broadband opportunity 95
Fiber deployment gathers pace 96
Exploiting wholesale opportunities 96
Rumored re-entry into mobile market 96
BT Fusion evolves 97
Operational performance 97
Deutsche Telekom (Germany) 99
Triple-play strategy and developments 99
A focus on infrastructure upgrades and bundled services 99
Football rights drive service appeal 100
Price cutting is ongoing 100
Try before you buy 100
Differentiation via service enhancements 101
Online services gather pace 101
Operational performance 101
France Telecom (France) 103
Triple-play strategy and developments 103
A focus on content 103
Three-screen strategy aims for differentiation 104
Satellite services fill the network void 105
Operational performance 105
Verizon (US) 107
Triple-play strategy and developments 107
Differentiating through next-generation network deployment 107
FiOS success drives revenue and ARPU 108
Triple-play availability on the increase 108
A multi-room TV experience 108
Verizon Hub seeks to lock in voice customers 109
DIRECTV partnership extends triple-play coverage 109
HD as a key differentiator 109
Promotions attract new subscribers 110
Operational performance 110
Comcast (US) 112
Triple-play strategy and developments 112
Rapid uptake of digital voice services 112
Project Infinity developing apace 112
Looking to WiMAX for ‘quad-play’ service 113
Pricing tiers revised 113
Content portability on the agenda 114
Operational performance 114
Virgin Media (UK) 116
Triple-play strategy and developments 116
Strong triple-play performance 116
Pushing the boundaries of consumer broadband 117
VOD continues to be a key differentiator 118
High definition comes to the fore 118
Operational performance 118
BSkyB (UK) 120
Triple-play strategy and developments 120
‘Switch and Save’ initiative pushes cost benefits 120
Sky Talk success boosts triple-play 120
Continued focus on advanced TV services 121
Exclusive content drives service appeal 122
Operational performance 122
Chapter 5 The future of triple-play services 126
Summary 126
Introduction 127
Identifying future trends in the multi-play arena 127
The emergence of quad play services 127
A competitive boost for telcos? 127
Convergence offers new possibilities 128
Quad-play bundling offers greater pricing flexibility 128
Content is where the money is 129
Advanced TV services offer the greatest revenue growth potential 129
Targeting new areas of opportunity 130
Converged services come to the fore 131
Platform-agnostic multi-play services on the horizon 131
Profitability should be seen as the key metric 132
Pricing and branding strategies will become more important than ever 133
Service quality and customer services are vital 134
Triple-play set for strong growth 135
Index 139
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List of Tables
Table 2.1: Number of residential voice lines by service provider, Dec 2006 to Dec 2008 26
Table 4.2: AT&T operational performance, Q2 2007 to Q1 2009 94
Table 4.3: BT operational performance, Q2 2007 to Q4 2008 98
Table 4.4: Deutsche Telekom operational performance, Q2 2007 to Q4 2008 102
Table 4.5: France Telecom operational performance, Q2 2007 to Q1 2009 107
Table 4.6: Verizon operational performance, Q2 2007 to Q1 2009 111
Table 4.7: Comcast operational performance, Q2 2007 to Q1 2009 115
Table 4.8: Virgin Media’s multi-play success 117
Table 4.9: Virgin Media operational performance, Q2 2007 to Q1 2009 119
Table 4.10: BSkyB operational performance, Q2 2007 to Q1 2009 124
List of Figures
Figure 2.1: Fixed-line connections by key country (connections per 100 people), 2002 and 2007 25
Figure 2.2: ARPU by fixed, mobile and broadband (£), 2002-2007 28
Figure 2.3: Mobile connections continue to rise 29
Figure 2.4: Global mobile connections (‘000s) and revenues ($), 2007-2013 30
Figure 2.5: Mobile-only households are becoming commonplace 32
Figure 2.6: Global consumer broadband subscribers, by platform, 2007-2012 34
Figure 2.7: Global consumer broadband subscribers, by region, 2007-2012 35
Figure 2.8: Top 10 consumer broadband markets by subscriber uptake, end-2008 36
Figure 2.9: Fastest broadband speeds advertised, by platform and country, September 2008 37
Figure 2.10: Broadband prices are falling across development markets 39
Figure 2.11: IP traffic forecast, Cisco 40
Figure 2.12: Global IPTV subscribers and revenues, 2007-2012 43
Figure 2.13: Global VOD revenues, 2007-2012 44
Figure 2.14: Top 15 IPTV markets by subscriber uptake, end-2008 46
Figure 2.15: Global IPTV subscribers, by region, 2007-2012 47
Figure 3.16: Cable operators and telcos show increasing service overlap 54
Figure 3.17: Offering video services can substantially boost ARPU for telcos 56
Figure 3.18: Bundled offerings offer considerable cost-saving potential 71
Figure 3.19: Bundled services make their mark in the UK 73
Figure 3.20: TV becomes a vital part of the service mix 74
Figure 3.21: Bundled service uptake varies by demographic 75
Figure 3.22: The rise of mobile broadband 79
Figure 4.23: AT&T operational performance, Q2 2007 to Q1 2009 93
Figure 4.24: BT operational performance, Q2 2007 to Q4 2008 98
Figure 4.25: Deutsche Telekom operational performance, Q2 2007 to Q4 2008 102
Figure 4.26: France Telecom operational performance, Q2 2007 to Q1 2009 106
Figure 4.27: Verizon operational performance, Q2 2007 to Q1 2009 111
Figure 4.28: Comcast operational performance, Q2 2007 to Q1 2009 115
Figure 4.29: Virgin Media’s multi-play success 117
Figure 4.30: Virgin Media operational performance, Q2 2007 to Q1 2009 119
Figure 4.31: Triple-play drives BSkyB’s ARPU growth 123
Figure 4.32: BSkyB operational performance, Q2 2007 to Q1 2009 124
Figure 5.33: Over 100m triple-play subscribers by 2012 136
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