Converged services a natural play for telcos

SINGAPORE: Converged services have become one of the marketing strategies employed by service providers today to grow revenues and subscriber base, and reduce customer churn.

"Bundling two or more services such as fixed voice, broadband, mobile and pay TV into attractive price plans has proven to result in less customer churn than single-service offerings," says Frost & Sullivan senior industry analyst Kamlesh Kalwar. He cites Hong Kong's PCCW which has managed to keep churn rate below one percent since introducing its converged services.

Kalwar further reckons that single-service telco offerings may soon be a thing of the past as tomorrow's consumers are likely to demand fully converged services from a single provider as a result of changing lifestyles and technology convergence.

New analysis from Frost & Sullivan, Asia-Pacific Converged Services Market Potential, reveals that approximately 20.8 percent of households across 14 Asia-Pacific countries subscribed to dual-, triple- and quadruple-play (quad-play) services in 2008 for total bundled billings of $58.7 billion. By 2014, residential bundled-service revenues are expected to hit $88.3 billion.

Dual-play services, typically fixed-line and broadband, are the most commonly contracted bundles at present, with 10.8 percent of residential users.

Triple-play services (fixed-line, broadband and TV) however are likely to see greater adoption in the longer term to account for 11.4 percent of residential subscribers in 2014; while dual-play subscriptions drop to 10.2 percent household penetration and quad-play (fixed-line, TV, broadband and wireless) expected to grow nearly two-fold to 4.9 percent.

Kalwar argues that three forms of convergence are driving the delivery of bundled or multiple services to a single user - convergence of networks, content and devices.

Network convergence: Thanks to IP (Internet protocol), existing networks are capable of delivering a multitude of services -- such as a broadband network enabling applications like Internet, TV and VoIP -- with just an incremental upgrade to the core network. Operators are banking on this opportunity to up-sell their services and increase average revenue per user (ARPU) and customer stickiness.

Content and device convergence: The increased mobility of present-day consumers dictates the need for multiple access points to the same content. Similarly, the sophistication of devices available today supports consumers' expectations for ubiquitous access to such content.

Given this, Kalwar believes that converged services present obvious benefits to both service providers and users, "Converged services is expected to be a critical strategy for communication service providers in the mid- to long-term.

"Apart from meeting customers' demands with attractive price points while maintaining ARPU and retaining customers, telcos are also able to roll-out loyalty programs to reward subscribers and offer one-stop customer service centres and consolidated monthly billings for users," he adds.

Kalwar cautions however that pricing alone is just part of the battle. "Quality of service, timeliness of market entry and [type of] content will also make or break an operator's converged offerings. StarHub, for example, has virtually cornered the pay TV market in Singapore with its exclusive content rights and early introduction of services," he says, adding however that content and broadcast regulations vary country to country, of course.