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
3 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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/
4 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
5 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
6 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
7 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
8 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
9 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
10 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
Source: JupiterResearch (6/2006)
11 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
12 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
13 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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:
14 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
Source: JupiterResearch (1/06)
Note: “CO” means central office.
15 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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)
16 © 2006 JupiterResearcha division of JupiterKagan, Inc.
For ISPs, Hybrid VoIP Services ThatUnfix The Home Phone Will be Critical
PC
-ba
sed
Last-Mile Broadband TelephonyEvolutionary and controlled platform
Source: JupiterResearch (1/06)
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.
17 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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) :
Source: JupiterResearch (6/2006)
18 © 2006 JupiterResearcha division of JupiterKagan, Inc.
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
Source: JupiterResearch (9/05)
19 © 2006 JupiterResearcha division of JupiterKagan, Inc.
Thank you
http://weblogs.jupiterresearch.com/analysts/fogg/http://www.jupiterresearch.com/