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Yet this kind of counter strategy at the macro business level occurs over and over in history. Cable companies emerged as the most viable competitor to heritage telecom, despite the fact that their POTS-switched business models never took off. Distracted by the collapsing CLECs, forcing change in the FCC rules, and designing migration strategies for their own POTS networks, only now are Telecoms refocusing on the TV business, banking on the advances brought by Next Generation Network technology.
Let’s look more closely at the woes the cable companies had entering the phone business. Delivering the same service to everyone via simple encoding and broadcast was much simpler than an on demand, switched service like telephony. While maintaining the cable plant was common to both services, everything else was new and strange to the cable companies. New modems needed to be invented, new set top boxes manufactured and installed for every customer. Switches and telephony protocols must be acquired from entrenched vendor
ecosystems that by this time were rather clever and voracious. The OSS was absolutely arcane. Even billing systems needed to be swapped out in order to show detailed transactions rather than flat rate packages (hmmm…with the benefit of hindsight, this is one investment they should have avoided).
Cable companies owned the content and they had access to the customer, but up-selling into the telecom’s territory was expensive. And consumers were wary about obtaining lifeline services from Cable companies. Clear television signals with occasional bursts of “snow” and some complete outages met the service threshold of most consumers. “Always on” is, however, the table stakes for dial tone and few customers were willing to gamble on the ability of the Cable companies to meet that target.
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"Cable companies owned the content and they had access to the customer, but up-selling into the telecom’s territory was expensive." |
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INDUSTRY PARTNER
from telecom companies. This time the cable companies are also the telecom companies, so they too join in this strategy. And it is this convergence of vertical businesses that is the ultimate success strategy. It is better for the content providers to merge with the content delivery companies. And that too has happened in the past. We predict more vertical mergers will be forthcoming.
Feasibility: But even if the business model is sound this time around, is it technically feasible and economically possible? Here the complexity of IPTV, the integration issues of triple play, and sheer scale in the mass of content raise a formidable specter against success. The answer is a possible yes, but not with today’s OSS and BSS systems. Remember the 60 components used in a trial for just IPTV are already beyond the capability of most management systems. Try correlating alarms from hundreds of instances of 60 different agent types. Follow the trail of blood through ten or twelve co-planer service layers. Here we see the same phenomenon of the CLEC days: OSS vendors are woefully behind the curve. Tweaking existing platforms will add complexity, and cost, neither of which can be accommodated in the service providers’ business models. Radically new OSS systems will be required to manage the complexity, scope, and scale of triple play and the forthcoming explosion of newly invented services.
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Triple Play here to stay: So history repeats again as today’s new success strategy for telecoms is triple play. This time the telecoms are in it to stay. They do have a potentially better product with interactive content, video on demand, internet-to-video crossovers, and targeted ad delivery. They eventually, some day for sure, might achieve cost savings by overlapping multiple services on one NGN infrastructure. And the visual nature of the World Wide Web over broadband has acclimatized existing telecom customers to visual media and content coming
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Reusing the past? We cannot carry over the architectural models, the data models, and the functional models from traditional telephony into triple play. Can itemized calls in customer bills be replaced with itemized content by changing the data description? Can a circuit be redefined as a pipe for delivering a movie? It was tried in the past when POTS applications were adapted to IP. It did not work well then. It will become a costly disaster if tried here. Downloading a movie is delivering a file, not leasing a pipe.
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