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may harvest those customers to its n-play. If it gets 39% of those customers, that’s $12 million a month in new n-play service revenues to AT&T.
Add in Steve Jobs’ bold new claim that he expects to sell 10 million iPods through 2008,9 and the iPhone could be moving the needle for AT&T in excess of $1 billion a year.
Yes, the math above is more than a little speculative. But the point is that the potential exists for killer devices to radically alter the revenue picture for service providers. The same mental exercise could apply to Comcast’s partnership with TiVo (since the “generic” cable company’s DVRs can’t match TiVo’s user experience or loyal following) or to Time Warner Cable’s video content.
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The point is that the potential exists for killer devices to radically alter the revenue picture for service providers. |
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accelerate new services and help carriers better monetize their IP networks. The Service Delivery Platform (SDP), in particular, provides a way for carriers and their partners to build and deploy new services themselves, using common programming technologies and protocols such as SIP and J2EE. Service providers can lower costs, increase flexibility, and bring new services to market quicker. As long as carriers stay out of proprietary traps, “Web 2.0” technologies will allow them to build networks of partners that can build their service portfolios — perhaps under collaborative or open source principles.
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A similar churn risk exists on the service quality and customer care side of the equation. Faster speeds have driven a flight from DSL to cable modem service (at least in the United States). And while customers may choose a provider based on price, they stay with a provider based on quality of service and customer care. When Comcast wins a customer for data services, they can cross-sell the triple play and steal Verizon’s voice customers. This again shows the power of the “all or nothing” phenomenon.
Strategic and Operational Impact
What, then, do these observations tell us about where provider strategy and operations needs to go?
(1) Service agility is critical. For years, the communications industry has relied on the network equipment manufacturers (NEMs) to produce new hardware that supported new services. The lead times for service creation were measured in years as offering new services meant putting proprietary carrier-grade hardware in every central office.
Today, the adoption of IP Multimedia Subsystem (IMS) standards promises to
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In short, it is no longer okay for service providers to wait for NEMs to innovate on their behalf. Providers must continue to innovate, offering more and better content and services. Today’s premium services (think GPS, ringtones, or High Definition) are tomorrow’s table stakes. Standards-based, agile service creation environments allow carriers to build or partner for innovative service. The first provider to offer carrier-grade presence services — alerting users to friends or opportunities nearby — will have a genuinely differentiable solution. The first provider to improve cell coverage in the home may lose some landline revenue, but will gain immeasurable customer loyalty.
(2) Packaging, targeting, and pricing of service bundles is more important than ever. Offering the right bundle to the right customer at the right time is key to market success. If all a provider has to offer is call waiting and long distance, the “up-sell” doesn’t require particular customer insight. But if the company’s product catalog includes a ringtone for every song in iTunes, that provider needs to know its customers’ tastes
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