Cable, Beware of Wireless

Broadband Users Will Go Mobile, Warns IBM Telecom Survey

By MCN Staff -- Multichannel News, 3/8/2010 8:00:00 AM

Between client meetings, Eric Riddleberger, partner at IBM Global Business Services, answered some e-mailed questions about what cable operators might take away from that company’s just-released survey on global telecom preferences. He was queried by Multichannel News Washington bureau chief John Eggerton.

MCN: What should cable operators look for in this report?
Eric Riddleberger: Overall consumer spending on communications in the U.S. is unlikely to grow significantly over the next five to 10 years; consumers will switch spending among providers and will be guided in their decisions by cost, network quality and customer service above all else.
Th e choice of providers is driven by three factors: Cost (80%), network (71%) and service (63%). U.S. consumers prioritize their mobile phones after their homes, but put fixed and landline and family holidays ahead of broadband. Broadband subscribers prioritize broadband access ahead of landline and family holidays.
With rapid migration to mobile of many online communication and content services, providers must more accurately anticipate and plan for growth in mobile data and build networks that can deliver large volumes cost-efectively.
Traditional telco operators (Verizon Communications, AT&T) no longer see cable operators as their main competitive threat: 76% of service providers identified Internet communication providers and their ability to innovate and experiment with services (79%) as the greatest competitive threat over the next five to 10 years.
A majority of U.S. consumers (67%) will turn to Internet information providers for online video, music, games and other entertainment content, while 44% will turn to cable operators, and only 23% to traditional telecom operators.

MCN: What does the study say, if anything, about the issue of network neutrality and open access?
ER: According to the study, 37% and 25% of consumers, respectively, rank as important the ability to purchase content once and own rights to use or view it on any device and the ability to access/watch any video content and not be restricted in selection by service.
Approximately half of the telecom providers believe it is unlikely that regulators will abandon a commitment to net neutrality in order to stimulate investment and improve customer experience/quality of service, or that unregulated over-the-top services will be subject to the same regulatory obligations as traditional services (e.g. contributions to universal service funds).

MCN: The study found that while half the communication service-provider respondents say investment in Internet protocol TV and video on demand is critical, they don’t expect it to be more than 10% of future revenues. What conclusions should we draw from that?
ER: The business case for IPTV/VOD is not driven primarily be revenue, but to retain market share. Far from being an alternative source of revenue, IPTV/VOD is to shore up traditional revenues through multiplay offers.