Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Keith McAleese, Client Partner, NTT DATA UK argues that quad play strategies only work if the service delivery is right. In the face of BT’s acquisition of mobile network EE, the industry has been focused on issues of competition, not only for the telco sector, but also for the broadcast and entertainment market. BT + EE = the UK’s first quad play operator with control of content along with fixed and mobile delivery platforms. It also personifies the culture of consolidation and bundling that is sweeping through the European communications and broadcast sectors. However, quad play is not a new thing; it is a very 90s concept. One that is rapidly falling out of relevance in a market dominated by convergence of networks, providers and delivery vectors. The notion of a single provider selling four distinct and often separate services under a single brand has its appeal (consolidated billing, bundled discount pricing, only one company to deal with when changes need to be made). However, in today’s converged and on-demand marketplace, it is not necessarily the only viable proposition. Consolidation and technology adoption is creating more players that can offer a quad play proposition, but also that can offer the content and services from quad play components over different networks and to a range of devices (mobile, tablet, smart TV etc). Ownership of all four distribution platforms – which BT has become the first in the UK to achieve – is great, but its not essential. The rise of over the top (OTT) services, coupled with recent government-level discussions that fixed line rental should be abolished, is evidence that people want services delivered wherever, whenever – not about tying services to specific delivery vectors. The rise of streaming OTT players has diminished the importance of traditional linear broadcasting, a key pillar of the quad play. This is pushing the likes of Sky, the BBC, TalkTalk etc. to bolster their on-demand offering across multiple platforms. It is also shaping the development of receiver technology like Sky Q, moving the emphasis away from reception via a dish and placing more emphasis on IP networks and apps. This has significantly changed the dynamic opportunity for quad play operators. Making service delivery more transparent to the user is a big opportunity, and something that is being explored in mainland Europe. Moving to a hardware-abstracted app environment potentially reduces long-term OpEx for operators. It reduces the end user and provider hardware overhead. In the case of phasing out PSTN telephony in favour of IP-base phone services (effectively turning the copper cable to the home into a pure IP delivery mechanism), significant cost savings can be achieved, as well as new services offered. In the US, the likes of Verizon are already piloting this with success. At the same time, it adds customer flexibility over where, when and on what device services are consumed, making it a sales differentiator. Equally, getting bundles right for constituent customer bases offers more opportunity for reference growth than simply signing them to four disparate, but wholly-owned network services (landline, broadband, mobile, TV). Virgin Media, Talk Talk and soon Sky – differ from the BT proposition in that they don’t own their mobile infrastructure. Each relies on an MVNO arrangement to provide their own branded mobile experience. OpEx is lower, but influence over network services is also minimal. It makes fully integrating an MVNO into the other three services to create a true “one bill, one company” offering harder to achieve. Due to this, there is still a chance that one of these could emerge as a ‘white knight’ for O2 should the takeover by Three flounder. For example, Sky owning all or part of a physical mobile network would allow it to bolster its fledgling MVNO aspirations and exert more influence on the network, service delivery and pricing. After all, integrated quad services represent more opportunity and are more aligned with the single-billing, single point of contact utopia. Quad play service delivery is unquestionably the next frontier for telcos and broadcasters alike. However, quad play network ownership is less critical. Users are far more focused on compelling content, delivered where they want, when they want and how they want. The service providers that can separate the services from the physical layer to offer such a dynamic delivery model to the public is the one that will ultimately win out in the high-stakes world of quad play. Keith McAleese is a Client Partner in NTT DATA’s Telco Media Practice. He has been leading large transformational change programmes with Telecoms clients across Europe for the last 20 years. He is driven by achieving real business value for clients particularly focusing on global delivery model strategy and implementation.
Consolidation and adoption of new technology has created more firms that can offer quad play and content and services from quad play over different networks, to a range of different devices. Following its acquisition of EE, BT is the first to own all four distribution platforms, however the rise of OTT services, coupled with the UK Government's call for fixed line rental to be abolished, has significantly change the dynamic opportunity for quad play operators. The company will continue to invest in improving their network infrastructure as well as investing in expanding into other markets such as China where they have already invested heavily in building out their network.