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Convergence and individualization in new service bundles
Two megatrends are shaping the European Internet markets. Firstly, broadband and digital convergence have been for some time, and will remain, the key drivers for industry growth. Increasing bandwidth will enable and drive demand for an expanding range of services. What we see today is just a starting point – a platform for future converged communication and entertainment services. Secondly, there is a growing demand for individualization by the customer and the need to tailor products to suit customer usage patterns, moving us towards on-demand entertainment services instead of the more traditional broadcast media. The availability of faster access at affordable prices will drive broadband adoption and take up rates for new services. There will be a move from access-only to “triple play”, as Voice over IP (VoIP) and entertainment services are adopted over time. Triple play drivers There are three key demand drivers for triple play services: Firstly, the migration to digital TV services is an important driver. In France, for example, over 500,000 Digital Terrestrial Television (DTT) adapters have been sold since the launch of digital TV in spring 2005. A second important driver is the spread of new end-user devices. Mass market penetration of digital photography, new game consoles with integrated DVD and DSL access, and low-cost set-top boxes are driving the demand for new services. Last but not least, next generation communication services based on VoIP/DSL and WiFi enabled by new devices such as game consoles with integrated community and communication services will drive the demand for convergent services.
New TV experience The European TV markets will change dramatically over the next five years. In Spain, the national roll-out plan targets a digital TV coverage of 80% of the population by 31 December 2005, 90% by 2008, and 98% in 2010. In Germany, 30 million households are expected to migrate to digital TV, enabling new digital services until 2010. In France, by the end of 2005 over one million DTT adapters are expected to be in use. Service bundles such as time-shift TV + electronic programme guide + Video on Demand (VoD) will be a real value-add for customers and change their TV experience. Imagine you can bring your kid to bed without missing the report about the last game of your favourite soccer team in the news. Market growth will eventually be driven by new network sourcing models, which will increase the choice of new services and create a broader customer base. A fair price, easy to use bundles and top content with early release windows are key demand levers.
Individualization The technological development is accompanied by a growing demand for individualization. Therefore, customer segmentation is becoming more and more relevant for telcos and needs to follow customer behaviour. Yesterday, customers were segmented by access technologies such as analogue, ISDN, DSL, etc. Today, customers are segmented rather in usage categories such as “fun-seekers” or “professionals”. Products need to be tailored to suit the specific usage patterns of each segment. Multimedia services @ T-Online T-Online gained first experience in digital media handling with the launch of its broadband portal T-Vision in Germany in 2002. In 2003, T-Online’s Video on Demand on PC service was launched followed by T-Online Vision on TV in 2004. In 2005, the service was enhanced by higher video quality and Dolby Surround. Customers in France are able to receive TV channels on their PC via the broadband portal LivePass. A service on the TV set is planned for 2005/06 based on a state-of-the-art multicast IP network with unbundled access. Up to 20 Mbit/s access bandwidth is reality in France today based on ADSL2+ technology. With VDSL2 up to 50 Mbit/s will be possible. In France, one of the most dynamic triple play markets in Europe, T-Online moves fast towards converged service offerings. Today, already every second new customer of T-Online France chooses the double play bundle of Internet + VoIP introduced already in 2004. Conclusion Triple play will be the winning strategy for 2005 to 2010, driving broadband revenues. National media markets, TV in particular, determine the appropriate triple play strategy. New entertainment formats will be enabled. VoIP is a challenge for incumbents and a sure bet for their competitors. You can find more information about T-Online and its multimedia services at http://www.t-online.net. Please send us your comments on this article. |
