Is Triple Play still a viable business model, for both the provider and the consumer?

The High Speed ​​Internet, Phone and Cable TV bundle was on the fast track in the public eye (US) … yet? Or are you being overtaken by “over the top” marketing and financial issues?

How, why and what do you see as reality versus perception. What does the future hold … near and far?

Like many advertising packages, “Triple Play” has earned a place in consumer awareness. But my perception is that consumers are paralyzed by the idea that they are hiring in the long term (1 or 2 years) for something that they may regret in the not too distant future. There may be a slowdown in adoption due to financial woes … but a provider that can address price, quality, and concerns about long-term contracts should see consistent adoption of triple play services.

I don’t think there is much of a problem regarding the longevity of the packages. However, what I think causes quite a stir is the price increase at the end of the promotion period. If the price is right, people would renew and if the supplier investigates, they could have competitive offers to retain customers. I think the model of having a cheap service during a period with an impending increase later on can be a huge impediment.

Yet another angle to look at is the customer service aspect. If people feel like they would be stressed out trying to get different providers to take care of their problems if something goes wrong in an unbundled multi-provider setup, that could be a reason for people to stick with the packaged service despite the cost.

Now yes … it is largely a marketing hype. But really, how many consumers do you know who actually know the term “triple play”? This is largely a term for the industry itself. What is marketed to the consumer is a “one bill and one payment” option for a host of services.

Here’s a breakdown of the factors involved for providers, consumers, and the future of “Triple Play” itself.

1) FOR THE SUPPLIER

If it is a legacy operator that has to substantially upgrade its network to provide triple-play services, the business model would be high risk depending on all the variables of the market in which it is located (demographics, price, positioning, competition, etc).

If you are a new provider that can take advantage of the various available wireless broadband spectra offering reliable TV service, then that would be a better situation as the network would be specifically designed for triple / quad gaming from the ground up. Depending on the wireless spectrum for which the operator is licensed, this network can be deployed to cover large areas at relatively low costs.

It is a viable business model for the company only when the customer sees value in the fixed telephony component. Companies that correctly packaged and priced multiple triple play offerings have been very successful in growing overall subscriber units (not just phone customers), revenue, ARPU, and operating cash flow. But the trend is definitely changing. In the growing world of cable-cutting consumers, more and more customers simply do not use or see value in cable service for personal, practical, and economic reasons.

Due to this rapidly evolving trend, telcos are less likely to spread the bundle discount across three products and will need to develop a new pricing solution that is attractive to cable cutting customers in the very near future. The ideal alternative will be for those MSOs who can take advantage of a wireless solution as a third alternative to triple play. Ultimately, femtocells or some other similar disruptive technology could provide the longer-term solution.

In short, triple play offerings are valuable tools in the telecommunications industry’s business arsenal, but the days of landlines as a substantial driver of triple play consumer behavior are likely to be numbered.

2) FOR THE CONSUMER

Many consumers are getting tired of the fact that triple play packs don’t live up to expectations. Many prefer the price and / or quality of individual services from other companies, rather than getting everything from one provider for a single price. Operators engage in constant price-based advertising and relentless marketing campaigns that only cause further confusion in the minds of consumers, with many simply ending up making a choice out of frustration. Triple Play remains a viable option for consumers who don’t want the hassle of paying multiple bills, with the convenience of all services from a single company. At the end of the day, all consumers want good triple-play / quad-play service, but each individual service must have a high quality of service.

A number of factors potentially stand between “you” and “your” desire for the cheapest rates that “triple play” offers:

a) Emergencies and blackouts:

While you know that 911 (or E911) service is available over the wire, the fact that the wires are not carrying current means that the phones will not work in the event of a power outage. It is not very useful, for example, to call PSE & G to tell them that there is a power outage. The fact that there is a short battery life available to provide power does not put me at ease. I’m not sure how to fix this problem.

b) Rate increases at the end of the promotion period. There is not much more to say about this one.

c) Inertia + annoyance:

At this time, many people have cable and Internet through their cable and telephone company through the telephone company. Many endure having their cable company call them sometimes four times a week and mail them at least once a week, trying to get them to switch. If you have to try so hard to sell yourself something, it’s not that great. And even if it’s that good, you’re pissing people off with all the phone calls.

d) Reliability – not of the service but of the administrators:

I have had good customer service experiences with cable companies, but they have often been much worse. If you don’t have TV for a day or the Internet, you can. But if you need to have a phone, you need to have a phone. Scheduling something for next Tuesday between 9 and 3 … which probably won’t show up anyway … won’t help the client when they are waiting for a job offer or a call about a sick family member.

e) Alternative sources of television content:

Most people are not there yet, and neither is the industry (see IPTV). But I can see a 5-10 year future where we can get all or most of our programming from (legitimate) web downloads. At that time, why would you need cable?

If you want to sell me a plan, these are the things (more or less in order of importance) that you have to overcome. So far, I don’t see cable companies doing that job.

3) THE FUTURE

With the advancements in wireless broadband technologies, triple play and quad play have already become essential for new ISPs and new telecommunications companies, especially in developing countries around the world. Technology enables small telcos to become full service providers and compete with much larger entities.

Overall … Triple Play is good for providers both from a marketing point of view and the profitability of their networks. Delivering more than an advertised package … but true quality at a reasonable cost is the key for consumers. As with most things, both the supplier and the consumer must meet the needs of a viable future. But in the end … the customer is king.

For a quick and easy tool to see what options you have as a customer in your specific area … check out the resources listed on Broadband Nation.