Triple-play: The Hype and the Reality

In the world of business, and especially in the telecom business, every now and then something comes along that just makes so much sense, everybody has to get involved. Naturally, the consequent bandwagon effect changes the very nature of that business segment, realigns the major players, kicks out several minor ones, and revamps all related processes down to the core. Such is the case with triple-play. The enthusiasm is overwhelming, and more startups, as well as incumbent telcos, are climbing aboard.

The existence of phone companies, Internet providers, and cable operators as separate entities is coming to an end. With triple-play, providers bundle video, voice, and high-speed data and ultimately, more new offerings will no doubt be tacked on, making today's "triple-play" a platform for quadruple play and beyond. Starhub, the sole CATV operator in its market (Singapore) is already offering quadruple play with its wireless arm plus US CaCos, offering wireless telephony in conjunction with wireless providers.

The Competitive Pressure
"The key driver is to get a larger share of the customer's wallet, increase ARPU (average revenue per user), and reduce churn by bundling services…" notes Jeanette Carlsson, Global Communications Sector Lead, IBM Business Consulting Services. "For instance, Starhub claims to have increased its wireless ARPU by 7% in households that purchase wireless, cable TV, and broadband services compared to wireless-only households, along with a 24% reduction in churn."

What's more, in order to stay competitive and move ahead of the single-play telcos, companies offering triple-play will have to offer services that are at least as good as, and preferably better than, existing single-play offerings. Pyramid Research notes that although triple-play is inevitable, the business case may not be as profitable as others would have us believe. The price of a bundled service would have to be set lower than the combined individual prices if a consumer were to acquire all three separately, a factor which makes margins slimmer and thereby eliminates weak players quickly.

"We very much expect to see a proliferation of business models and increasing use of partnerships and strategic alliances to deliver against the convergence vision..." -Jeanette Carlsson, IBM Consulting Services

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