Coopetition: The New World Order of Communications Services

By: Jesse Cryderman

Over the past eight years, Pipeline has published an annual issue exploring the competitive landscape. In the beginning, this focus was centered squarely on Cable vs. Telco, and for good reason. With the introduction of cable broadband and Voice-over-IP (VoIP), cable companies (MSOs) began to leech customers from wireline providers at a remarkable rate.

In a 2008 story, Editor-in-Chief, Tim Young reported on data from Insight Research that estimated telcos would lose more than 17 million residential phone lines to cable competitors. Then telco-tv offerings like FiOS and U-Verse struck back by providing a platform for voice providers to grab a slice of MSOs' video revenue. Would TV from the phone company undo the damage done by cable's digital voice offerings? These developments gave rise to triple- and quad-play service offerings that typified the state of competition for many years.

Then a new, disruptive player emerged that threatened both: Over-the-top (OTT). Companies like Netflix, Skype, Amazon, YouTube, and Hulu, along with a myriad of social messaging platforms, began delivering competitive low- or no-cost services over cable and telco connectivity. Neither player in the former two-party system was prepared for the meteoric rise and eventual onslaught of OTT offerings that delivered voice, video, messaging, and social interaction for free over their own pipes, essentially relegating their connectivity to a commodity. Headline-grabbing doomsday scenarios were predicted as pundits went into speculation mode.

So in 2010, the competition narrative became Cable versus Telco versus Everyone. We discovered that in an attempt to diversify and differentiate their service offerings, both cablecos and telcos were wrestling free of their legacies to become providers of a “total network experience.” As OTT service revenues and subscriber bases boomed, we took a close look at these trends in November, 2010. In a story Pipeline wrote, Effi Goldstein, director of marketing and product management for IPGallery said something that presaged the evolution of competition to where it is today: “Service providers are losing their most profitable service … and it’s impossible to monetize their customers when attention is elsewhere.”

The evolution of competition to coopetition began to change the way we think about competition itself. The battleground for service supremacy is no longer a binary, "either-or" equation, but a competitive calculus couched in the creation of a critical mass of communities through service aggregation. This seismic shift has resulted in partnerships that would have been, just a few years back, unthinkable. As connectivity and even services become commoditized, bundling, layering, and leveraging provider's unique strengths to deliver a compelling end-to-end experience becomes the tool of competition.  

While coopetition is increasingly being embraced by large MSOs and CSPs, it is still in its infancy, and traditional battles are still being fought. In this article we'll explore today's competitive landscape as it is, uncover some innovative cooperative cases, and then attempt to peer into the future to see where these trends may lead.