Electro/Telecom Industry Trends
Feb 2006
Turning the Triple Play Into a Home Run
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Even as the residential market becomes increasingly saturated with offerings for bundled telecommunication services, a new study released by consulting firm AMI-Partners last month demonstrates that these packages are becoming as equally attractive to small and mid-sized businesses in the United States as they are to home users. Findings such as these continue to spur on telecommunication providers to offer what is known as the triple play to increase market share and reduce customer churn. The strategy seems to be working.
Despite its popularity, the term “triple play” is an ambiguous marketing term, often changing in meaning depending on the service provider and specific market demands. In the residential arena, triple play has most often come to refer to a bundle of commonly desired services—Internet, TV, and telephone—delivered over a single connection. However, this definition of connectivity is often different depending on the service provider—and reflects each company’s individual infrastructure and reasons for adopting the triple-play strategy.
Phone companies, for example, who have long developed expertise in bundling services by offering local and long distance voice service as well as access to the Internet, are looking for new opportunities by offering TV service as part of their triple play. However, to start with, many of these companies aren’t offering service through a single pipe—instead, they may deliver voice and high-speed Internet over their phone lines, and partner with satellite providers to provide video service. But according to the Telecommunications Industry Association (TIA), the long-term strategy of many of these companies is to eventually deliver video over fiber to the home or neighborhood.
Cable companies, on the other hand, already deliver both video and high-speed Internet services, and are looking to beat phone companies at their own game by bundling in phone service as well. According to market research firm Frost & Sullivan, cable companies may have an advantage over the phone companies since they already have the infrastructure in place to deliver video and broadband Internet.
However, the triple-play strategy isn’t just limited to incumbent companies. Advances in wireless technology are helping a new breed of players potentially enter the market as well—and offer their own version of bundled services, known as the quadruple play. By offering voice, video, and Internet with wireless capabilities, wireless providers are able to sidestep the infrastructure concerns of wireline operators. At the same time, they face their own technical challenges, many of which are being addressed by new initiatives led by industry organizations.
One advance that has benefited wireless operators is the standardization of the multimedia broadcast multicast service (MBMS) as a component of the third-generation (3G) cellular technology specification being developed by the Third Generation Partnership Project (3GPP). With MBMS, wireless carriers can better enable the delivery of rich multimedia content to mobile devices. Another industry group, TIA, has also taken the lead in standardizing wireless broadband technology with the formation of a new committee dedicated to developing standards for mobile multicast communications. (See the accompanying article, “A New TIA Engineering Committee to Meet a New Need,” for more information on the TIA committee.)
Even as wireless operators continue to push the boundaries of the services they can offer, cable companies are also looking to offer their own version of the quadruple play. One way they may do so is through mobile virtual network operator deals, which will allow them to sell wireless services through partnerships with wireless carriers, rather than having to invest in building their own networks. The reasons to do so are compelling as telecommunications companies continue to see that the market demand for bundled services is showing no signs of slowing.
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