Triple play convergence is now being driven by market forces, rather than the heavy hands of technical departments and marketing speak. Erik Larsson looks at its potential development
Voice, video and data convergence is finally happening. For years, this convergence was driven by technical possibility rather than business reality and market forces. Today all that has changed: business drivers and consumer behaviour have combined to create the perfect conditions for the adoption of bundled voice, video, and high-speed data solutions across Europe. In this article, I will discuss how this new world of triple play convergence is becoming a reality, how successful IP triple play platforms can be created, and how to make the right technical and business decisions to ensure success in your own triple play deployments.
Five years ago, some of the largest triple play service providers in the world today, like FastWeb, barely existed. Incumbent telcos were only slowly investing in next-generation technologies such as Voice over IP (VoIP) to migrate away from expensive and inflexible TDM-based equipment. After the crash of the technology bubble of 2000, it took some time for incumbent service providers to begin to see the business benefits of these new technologies. And it took a while for the average consumer to understand the potential of the new services. It is now all happening: at the end of 2004, Europe had 33.5 Million broadband subscribers, representing 20 per cent of all homes, according to Strategy Analytics. And many of these households get voice, video, and data services from the same provider, which is the basis for triple play.
Telcos are now actively investigating or rolling out IPTV and IP Video on Demand (IP VoD) services. The more innovative incumbents, like a resurgent France Telecom, are also heavily marketing video calling services and video mail. Wireless providers, who have just started to roll out 3G-based networks, are now looking at video services. And of course, next-generation pioneers such as FastWeb are offering new fibre or ADSL-based networks with triple play service bundles. Today's success stories have shown that a converged network has both business and psychological advantages. On the business side, IP based networks are less costly to finance and operate, and new service bundles generate increased revenues. But even more important is the view that these new service bundles facilitate the creation of long-term relationships with customers, reducing customer churn (and therefore reducing the costs of attracting, keeping, and bringing back customers) and increasing adoption rates for new services.
IP triple play, which is the combination of voice, video and high-speed data services from one provider, is the first example that demonstrates the value of an integrated bundle. Let me list the critical elements of a triple play solution and then discuss them one at a time:
1. Integrated subscriber experience
2. Converged and scalable network equipment
3. Simple, yet sophisticated management system
4. Service creation capabilities
5. Multiple access technologies
6. Flexible business models
7. Aggressive marketing and consumer education
1) Integrated subscriber experience
The biggest change in the mindset of service providers today is how a service needs to adapt to consumer behaviour, rather than consumer behaviour adapting to new technologies. The best example of this is the new 'TV Portal' or 'Home Kiosk' products being offered by triple play service providers. Combining the best features of the menu-driven digital TV display with the familiar mobile phone interface, these TV portals provide an integrated subscriber experience that consumers understand within seconds. Instead of being forced to get up from your favourite TV show every time the phone rings, the TV portal displays the caller ID on the screen, and gives you a chance to send unwelcome callers directly to voicemail. Subscribers can also check called or caller lists, and even dial from the TV using a normal remote control (the calling party then picks up a nearby connected phone). All of the communications and entertainment equipment (TV, phone, remote control) remains the same except for a new IP set-top box connected to a broadband access device. To extend the capabilities of the TV 'family interface', a similar subscriber portal is offered on the PC which takes advantage of the mouse and keyboard to offer a greater level of control of the service (for example, setting up call forwarding rules to send calls to your vacation home; or programming the phones not to ring past a certain hour to keep from waking up the baby).
2) Converged and scalable network equipment
The experience of the network operator should also be integrated. Today's new multi-protocol SIP/MGCP/H.323 softswitches are much easier to manage than legacy TDM switches. The provisioning interfaces and dial plans have much greater flexibility too. Combine this with IP video equipment and media servers, and you have a next-generation solution that serves all of your voice, video, and data needs. A true triple play offering as defined above is not possible without a new integrated head-end. For example, a legacy TDM switch upgraded with an IP gateway card will not be enough, and neither will a call control agent imbedded into a media gateway. To be able to deploy future IMS and TISPAN compliant services, the transport, call/media control, and application layers must all be disaggregated and have the ability to be distributed without regard to any geographic barriers. This is the only way to deliver a scalable multi-service platform that can grow to millions of subscribers, and across many different access technologies.
3) Simple, yet sophisticated management system Equally important to converged network equipment is an Operations Support System (OSS) that can effectively manage all the different services in an integrated way. This means single data entry for voice, video, and data subscriber services, plus rating and billing for these services. Also, the service provider should have no limits to cross-bundling programs (for example, providing one free VoD movie for every 100 minutes of VoIP talk time). The OSS can become a powerful weaponthat uses different billing schemes to further cement customer loyalty. In our experience, an easy-to-use but sophisticated management system is as important as the equipment that enables the service.
4) Service creation capabilities
Related to the OSS system is a service creation environment that allows you to rapidly define and roll out new services. This requires a flexible object-oriented environment that allows you to create decision trees and workflows to define a new service simply by dragging and dropping and linking known service objects. Some of the better service creation tools also have service simulation programs that can help you predict profitability for new services before you actually deploy them. And since this service creation environment is tied to the subscriber portal, new service promotions can be delivered as TV menu 'pop-ups' which subscribers can select and provision through the push of a button on the remote control. Studies have shown that subscribers are ten times more likely to sign up for a new service if they are not forced to write down a number, call a call centre, or search on the web. Finally, an IP service creation platform should be able to rollout a range of subscriber services that go beyond the basic triple play (e.g., gaming, video calling, distance learning, e-medicine, etc.).
5) Multiple access technologies
One of the key lessons from successful deployments is that broadband access technology should remain flexible. At FastWeb, for example, the original business plan was focused on fibre as a very high bandwidth medium for triple play. Today FastWeb is about half fibre and half ADSL. There are some trade-offs of course. Fibre provides almost unlimited bandwidth and therefore does not force you to choose among competing high-bandwidth service bundles. Fibre also has the advantage of allowing the service provider to deploy lower cost MPEG-2 video compression (IPTV for about 4 Mb/s; HDTV for about 20 Mb/s). On the other hand, while ADSL requires more costly MPEG-4/H.264 video for multiple IPTV channels (IPTV at about 2 Mb/s and HDTV for about 4 Mb/s), it can also take advantage of existing telco copper and save millions on last mile fibre investments. Similar lessons can be applied to wireless last mile technologies, as WiFi/Mesh/WiMax technologies could be considered replacements for or enhancements to today's fiber/ADSL/cable architectures.
6) Flexible business models
Another lesson learned is that triple play service providers should be open to different business models. With triple play, there are a multitude of different business models when you consider who owns the network, the application servers, the access technologies, the customer premises equipment, the marketing relationship with the subscriber, customer care, etc. A service provider who has invested in a triple play platform could decide to open up its network to a range of outside ASPs focusing on different types of value-added services. In addition, a triple play service provider targeting the residential market may decide to offer business services such as IP Centrex to business customers, and vice versa.
7) Aggressive marketing and consumer education
A final recommendation for deploying successful triple play solutions is to not underestimate the marketing and education required to convince subscribers to use your new services and lock them in before your competitors do. An effective campaign should also give new subscribers the confidence and comfort to work through the inevitable challenges that will arise in any new triple play deployment.
To conclude, IP triple play services are viable and profitable today. However, in this new open competitive environment where traditional rivalries are intensifying and new entrants threatening incumbents, making the right technical and business decisions will make the difference between success or just survival. n
Erik Larsson is the Vice President of Marketing for Netcentrex, and can contacted via tel: +33 (0)1 58 71 33 26; e-mail: firstname.lastname@example.org