Friday, July 6, 2007

Carriers as "Experience Providers"

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA.

Carriers as "Experience Providers"

This panel addresses the new focus on consumer experiences with an examination of changing business models, enabling solutions for service providers, and fixed-mobile convergence trends.

Jay Deen, Vice President of Technology, Casero, Inc.
Kai Hackbarth, Requirements Chair, OSGi Alliance
Keith Higgins
, VP, Marketing, Stoke, Inc.
Ellis Lindsay, Home Networking and Digital Lifestyle SME, Alcatel-Lucent
Kirk Munroe, Director, Product Management, Radialpoint
John Ulm, Fellow of the Technical Staff, Connected Home Solutions, Motorola, Inc.
Moderator: Yuanzhe (Michael) Cai, Director, Broadband & Gaming, Parks Associates

In 2006, U.S. broadband penetration reached 50% while bandwidth costs year over year have been plummeting. The next step is for service providers to move beyond selling raw bandwidth and start focusing on smart bandwidth and smart-home applications. They need to leverage the multiple screens they own and deliver cross-platform experiences based on convergence networks. The panel discussed this transition, including what’s happening and what’s to come. The panel also addressed the opportunities for hardware and software solution providers. For instance, a residential gateway is likely to be a key enabling platform for service providers. France Telecom has shipped more than 4 million LiveBoxes to date, and their success with the “unik” fixed-mobile convergence phone service is partially because of the large installed base of LiveBoxes.

Bundling is another megatrend in the carrier market. Cable MSOs are killing telcos in certain markets due to their triple-play success. Fifty percent of Comcast’s new broadband subscribers in Q1 2007 churned from telecom carriers. Consumers are likely to focus first on discounts and on-bill convenience but will eventually demand convergence features. Carriers need to make sure they educate consumers along the way.

Right now, the most successful VAS offerings on the broadband platform are still PC and home network security, although other services are gaining traction. According to Radialpoint, 15% of customers for their carrier clients buy security services from broadband carriers, and it has become a sizable revenue stream. The next step is to provide network-based backup, sharing, and community services. Exclusive content may also be a differentiator, and major carriers have begun investing heavily in content.

Another topic discussed was that consumers don’t always need to foot the bill for the services they receive. Carriers can become arbitrators between consumers and businesses to provide “validated bandwidth” in a similar way to restaurants validating parking for their patrons. However this requires carriers to know more about their subscribers and leverage that knowledge in order to deliver targeted advertisements relevant to consumers. Carriers have not monetized user information very well and have a long way to go before they can catch up with Google and other over-the-top providers. Over-the-top is definitely a threat, but quality will always be important – and carriers can provide that quality with their managed network. Carriers have also begun to use more white-label solutions instead of partnering with companies like Yahoo! and MSN for their Internet services.

IMS will be an important platform if the industry is to realize this vision of experience-based services. Carriers need to improve both the front and back ends of their platforms. Right now the technology is still at an early stage, but investment in the next few years will be significant. IMS will enable carriers to provision new services on the fly. Right now developers have demonstrated only limited applications, but IMS is like IP — it has unlimited potential. However, it will take many years for carriers to transition to the IMS platform. Having the ability to provide both wireless and wireless services will also be extremely important for large carriers. The cell phone will be the key for consumers to access other personalized services, and with more and more broadband-enabled cell phones on the market, broadband solution providers need to begin addressing this platform. Universal parental control and security will also be important. In the end, if carriers can make consumers’ lives easier and more comfortable, they’ll make money.

1 comment:

David H. Deans said...

Carriers clearly know how to deliver a broadband service, but it's unclear how they are capable of designing new compelling experiences.

As an example, IPTV has typically been launched by Telcos without utilizing the unique attributes of their IP NGN infrastructure.

Perhaps we'll finally witness substantive innovation in 2008.

David H. Deans
GeoActive Group USA