2005: Year of the Quadruple Play
Consumers looking for a four-part package of services that includes high-speed Internet, cellphone, local telephony and television services will have a larger number of choices in 2005.
Rogers Communications Inc. will enter the fray in July with the launch of Internet telephony service, while Telus Corp. will get into the game with the launch of a digital TV service.
The quadruple-play has become a must-have for carriers and cable companies because they “lock in” consumers by offering modest discounts. Consumers can reduce their monthly bills but they tend to spend more money with a single service provider, rather than spreading it around to several suppliers.
The quadruple-play market is becoming more crowded as carriers roll out digital TV over their high-speed networks while cable companies get into the local telephony business using Voice over Internet Protocol technology.
The significance of the bundle was illustrated this week when The Wall Street Journal made a big deal of a potential agreement that could see Time-Warner Inc., the second-largest cable firm in the Untied States, offer wireless service from Sprint PCS to its 11 million customers. Time-Warner, which already offers cable, local telephony and high-speed Internet access service, said it is working with Sprint on rolling out a wireless trial.
In Canada, Eastlink Communications Inc. became the first quadruple-play service provider after it signed a deal earlier this month with Rogers Wireless Inc. EastLink said customers, who already buy at least two of its other services, will be able to buy wireless service from Rogers at a 15% discount if they sign a three-year contract.
Bell Canada has offered all four services for several years, although it needs to file a tariff with the Canadian Radio-television and Telecommunications Commission prevents if it wants to include local service in a bundle.
The necessity or desire to offer triple-play or quadruple-play bundles has prompted different service suppliers to establish alliances. Primus Canada Telecommunications Inc. and Call-Net Enterprises Inc. are reselling wireless service from Microcell Telecommunications Inc., while Shaw Communications Inc., which will launch an Internet telephony service next year, has talked about entering into a deal with Rogers Wireless.
With several carriers and cable companies offering the same bundle of services, a key challenge will be product differentiation. How will these companies appeal to consumers when they are serving up the same flavours of ice cream?
Telecom consultant Mark Goldberg said the marketing tools to sell bundles will be no different than how stand-alone services such as high-speed Internet access and television are sold today.
“At the end of the day, the value in a commodity-type service is excellence in customer service,” he said. “It tends to be proven when there is a problem; not when everything is running smoothly. How responsive is a company when you want initial installation? Do they provide service to meet your schedule or give you a broad time range? When you want to ask questions about a bill, do they make you go through five different levels of a call prompter? Those are the kind of things customer will be looking for.”
Providing this service appears straightforward but it is far from simple. BCE's Bell Mobility unit, for example, has gone through terrible problems trying to implement a new billing system. For the past six months many of its customers have not received their bills or have been billed incorrectly. On a positive note, Bell's Emily voice-recognition system has pared down call-centre activity and reduced operating expenses.
Kona Shio, managing director with Conscius Capital Partners, said price could be a weapon. (Many bundles come with two- or three-year contracts, which discourages consumers from leaving to take advantage of better offers.)
“For telcos and cablecos, [bundles] make sense to reduce [turnover],” he said. “It is not pricing to attract subscribers but pricing to attract and retain subscribers.”
© National Post 2004
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