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Cable Innovation’s End Goal: Retention

While technology and strategy evolve, one axiom remains: It’s all about the customer 1/08/2018 8:00 AM Eastern

If you’re a cable subscriber, you’ve been a participant in the slow but steady transformation of a complex and multifaceted industry. While most consumers may think that turning on the television to watch CNN or stream Netflix is a simple process, making these processes work seamlessly has been years in the making.

The television was once the central component of our home entertainment experience; now, it could be a wireless phone or tablet, laptop or other screen-based device. Consumers with 4G/LTE-connected devices can get HD-quality pictures without the need for WiFi, and wireless providers have created packages to lure them to do exactly that. Competition has cost the cable industry a large portion of younger audiences, who now use Apple TV, Google Chromecast, Roku or their wireless devices to stream online services such as Hulu, Netflix and Amazon. These new options create business headaches for MSOs, who must coexist, cohabitate or partner with these content providers.

The Innovation Imperative

What does this mean for cable MSOs? It means a forced hand to innovate, and likely faster than they’ve been used to. Over the past five years, we have seen investments in fiber, expansion into wireless services, higher broadband speeds and a broader service portfolio. This is all happening in areas where many U.S. consumers only have a single cable provider or ISP they can subscribe to. However, the competitive threats from outside have also been a driving factor in forcing these changes. Together, these influences have driven providers to look further than the service-centric portfolio, into operational efficiency, customer support, workforce management and, in a generic sense, greater levels of automation — and all done without causing any disruption to services.

The cable and broadband industry’s focus on all this innovation must be centered on one key outcome — customer retention. The reasoning is simple: Regardless of what may be a broadband monopoly in certain markets, consumers are still cutting the cord. Research firm eMarketer has stated that in 2017, a total of 22.2 million U.S. adults will have cut the cord with cable, satellite or telco TV services. That is up 33% from 16.7 million in 2016. Enterprise customers are a growing portion of the total base, but remain a small fraction of the overall business today. These numbers paint a somewhat dire long-term picture for the industry. That makes the customer experience one of the most critical factors that companies must embrace, if not the most crucial, and the cable industry must take note.

Cable providers should be investing in innovation around the customer experience in both tactical and strategic ways. While some of these innovations may not be customer-focused, all are business-focused, which in turn has a direct impact on customer satisfaction, retention and churn reduction. Highlighted are some of the more effective methods that can have a positive impact on the customer relationship.

Intelligent Use of Net Promoter Scores for Both Organization and Employee: Investment in the right tools to gathering data at every step of the customer lifecycle is one of the best real-time methods to gain access to customer expectations and sentiment. Cable providers should gather NPS regarding home installs, follow-ups to calls or visits designed to speed problem resolutions, and for all issue-resolution activities.

Greater Use of AI and Analytics for Network Performance Management: The use of a broad range of tools to measure network performance, node health, enhanced correlation across a broad range of end points and workforce guidance on next best action creates process efficiencies that help eliminate customer facing problems.

Increased Use of DevOps to Speed Innovation Cycles: DevOps is gaining ground across the entire communications industry as a way to accelerate product development, increase efficiency and become more responsive to changing customer and business needs. The DevOps methodology can offer the cable MSO major advantages as it takes on digital transformation and addresses customer expectations. These include accelerated time to market for new services, increased flexibility and optimized cost-efficiency.

Virtualization, Starting With vCPE/vCCAP: The move to virtualization in cable is well underway. CableLabs, in a recent Open Networking assessment, said the combined technologies will lower operating and capital expenses and increase revenues from new services provided to consumers. MSOs also have the opportunity to leverage the newfound flexibility of virtualizing service end points, pushing costs down at the end point level and moving functionality to the cloud. Going to a virtual Converged Cable Access Platform architecture migrates the current headend from RF to digital, allowing the MSO to provide IP centric services (video and data) from the headend to the node. This, in turn, removes the need for a physical CCAP or cable modem termination system, reducing costs and complexity and still allowing for easy integration into the cable provider’s existing OSS/BSS.

Virtual consumer premises equipment lets the MSO place a low-cost “dumb box” in the home and have all services and operations fed directly from the cloud. This translates into reduced costs for hardware, more “plug and play” functionality, fewer truck rolls to the home to replace out-of-date equipment and the ability to push more innovative services more quickly, keeping the customers engaged and loyal.

While each of these innovations is more or less invisible to most cable customers, the investment provides a tangible benefit to the customer experience. The rising expectations of the customer will continue to drive innovation and create disruption across the IT landscape. Opportunities to serve the customer have never been more significant, and the biggest changes are yet to come. If innovation still has a predominant focus on customer outcome, then the cost of that innovation will ultimately be “priceless.” In today’s competitive market, that’s a cost worth investing in.

Paul Hughes is director of strategy at Netcracker Technology.

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