(Image Credit: iStockPhoto/gyn9038)
Converged services are not a new idea in telecommunications. For over a decade many providers have successfully bundled fixed-line telephony and broadband into single offerings. In the UK, for example, about 46% of households subscribe to a so-called “double-play” package. More recently, “triple-play” bundles that combine fixed-line telephony, broadband and paid television have become common. These packages have seen strong uptake in several markets; France, for instance, now has roughly 30% of households using triple-play services.
Quad-play is the next evolution, combining fixed-line telephony, broadband, paid television and mobile services into one package. Over the past 18 months, quad-play offerings have grown, with operators such as Virgin Media in the UK and Deutsche Telekom in Germany among those promoting bundled products. But will quad-play become widely adopted, or do many consumers still prefer to keep services separate?
What do customers really want?
Triple-play has already established itself in the market, and quad-play promises several clear benefits for customers:
- Potential cost savings from purchasing a fully bundled package
- Access to additional content, including exclusive TV channels or streaming partnerships
- New services bundled into the plan, such as integrated internet conferencing or value-added mobile features
For many subscribers, a single consolidated bill and a unified service experience are attractive. However, some customers leave quad-play bundles after short contract periods. Common reasons include unclear billing where charges are aggregated without detail, and a preference among younger consumers for a “pick-and-mix” approach. Many of these users choose over-the-top (OTT) services like Netflix or Amazon Prime for entertainment while maintaining separate mobile contracts.
The added complexities of bundling for CSPs
Fixed-line, broadband and TV services are often purchased on a “one per household” basis, but including mobile services introduces a significant complication. In the US, for example, nearly half of households have five or more mobile devices. That diversity creates challenges for packaging, pricing and customer management, because the number of potential combinations increases dramatically.
Communications service providers (CSPs) need intelligent systems that can segment customers and monitor behavior to present the most appropriate offers at different points in the customer lifecycle. Automation is essential to make this process feasible at scale. CSPs should establish subscriber behavior thresholds that trigger automated bundle recommendations. For instance, network probe data can identify two mobile phones regularly used within the same household; usage key performance indicators can then be analyzed automatically to match that household with the most suitable multi-play package.
Future predictions for converged services
Converged services have traction and appear likely to remain a significant part of the market. Triple-play has already proven its value; regulatory and consumer research has shown substantial price differences between bundled and standalone purchases. In 2013, for example, Ofcom reported that the standard price of a triple-play bundle was materially lower than the combined price of equivalent standalone services.
Quad-play introduces more variability, however. With multiple mobile devices per household, the range of feasible packages and pricing options expands, which makes it harder to measure whether customers are actually receiving better value than they would by buying services separately.
For quad-play to succeed broadly, CSPs must demonstrate and deliver clear benefits to subscribers. Providing detailed billing breakdowns helps customers see the value of each component in the bundle and reduces confusion. Transparent pricing, personalized recommendations and straightforward contract terms will all be important to build trust and encourage long-term retention.
Looking further ahead, if video increasingly shifts to internet-delivered platforms and voice-over-IP achieves consistent, reliable quality, traditional fixed-line telephony and legacy television services could become less central to consumers. When that transition happens, the industry will need to identify the next major convergence opportunity and adapt accordingly.
What are your thoughts about the future of converged services? Let us know in the comments.
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