Marketing

Calling Up More Integrated Bundles

5/25/2007 8:00 PM Eastern

The triple play has been a proven winner for cable companies, which continue to siphon off customers from the incumbent telephone companies by the thousands.

What to do for an encore? Phase two of cable’s campaign into voice will be to make the bundle even stickier, by integrating telephone features across the video and data legs of the triple play.

Operators and technology vendors have already been experimenting with such “unified communications” features. One popular example: Caller ID on the TV permits viewers to see who’s calling via a pop-up box on the screen without getting up from the sofa. Such a feature could let a subscribers send the call into voice mail or even answer it directly via a speakerphone-enabled set-top box and signal the digital video recorder to pause the current show they’re watching.

Operators might be able to squeeze incremental revenue out of features like caller ID on the TV. But they will also employ such advanced services to cut churn and make triple-play packages more attractive, providing capabilities that telcos either charge extra for or don’t offer.

Comcast, for one, is starting down this path with the idea that integrated messaging will enhance the “value” that subscribers perceive they get from the triple play.

Later this year, the No. 1 cable operator plans to launch “SmartZone,” a free Web dashboard that provides access to a subscriber’s e-mail, voice mail, instant messaging and address book in a single view.

“It’s our strategy to build the best cross-platform experience possible,” Comcast senior vice president of product development Greg Butz said. “We want to make the products [in the bundle] work together better.”

One key feature of Comcast SmartZone is “Visual Voice Mail”: It lets a subscriber play back voice messages from a Web page. Users can also forward voice-mail messages as e-mail attachments.

At some point, Comcast plans to extend SmartZone features to provide similar features on TVs, Butz said. “You could see missed calls from your TV, possibly your e-mails,” he added.

SmartZone features will be included at no extra charge with Comcast Digital Voice service, and SmartZone will eventually become the default e-mail interface for all its broadband subscribers.

Comcast is also coming at the unified-communications concept from another direction. It plans to introduce a Comcast-branded “enhanced cordless phone” next year that will let subscribers read e-mail messages, listen to voice-mail messages and look up phone numbers, either in a subscriber’s personal, network-based address book or using a white pages directory.

Cox Communications plans to expand the rollout of its “Phone Tools” application, which gives subscribers online access to their voice mail and phone service, to all of its more than 2 million Digital Telephone customers by mid-2007.

The operator also has said it will provide caller ID on the TV in “select” markets this year, but director of media relations David Grabert said the company wasn’t releasing details about deployments yet. The feature lets customers with digital-cable and phone service see who’s calling while watching TV and also redirect incoming calls to voice mail or another telephone number.

TO CHARGE OR NOT?

Phone Tools is available as a standard part of Cox’s Digital Telephone service. But the operator wouldn’t disclose whether it expects to charge a separate fee for caller ID on the TV.

There’s evidence that consumers might be receptive to paying as much as $5 per month to see who’s calling on their televisions.

Of 2,177 adults surveyed last month, 64% said they were at least “somewhat interested” in the feature, according to a survey commissioned by TargusInfo, which provides phone-record database lookup services.

Of that group, almost two-thirds said they would be willing to pay extra for this service — typically an additional $5 per month.

The online survey was conducted by Harris Interactive.

“Differentiation is great. But that only gets you so far,” TargusInfo vice president of segment marketing Rob Fisher said. “We wanted to show that not only are customers interested in these new services, but they’re willing to pay for them.”

Fisher pointed out many existing landline customers of telephone companies are still paying for individual services — like caller ID, call waiting and voice mail — which many cable operators include as part of the baseline voice service.

In fact, Verizon Communications and AT&T offer integrated messaging features today, and they both charge extra for them.

Verizon’s “iobi,” for example, is $7.95 per month for consumers and $11.95 per month per line served for small businesses. The service provides caller ID on PCs, the ability to forward calls as they come in, Web-based voice mail retrieval and other features.

Charging a premium for a service obviously inhibits uptake. Verizon is no longer actively marketing the service, media relations director Jim Smith said. “We found in the early going that it is simply too rich for many customers,” Smith said, adding that iobi “sells fairly well” but he would not disclose the number of subscribers.

The jury is still out on what price caller ID on the TV could command, said Matt Doyle, product line manager for Motorola’s Seamless Mobility Applications Server. The product, which is designed to extend messaging functions and other applications to multiple platforms, will be available starting in the third quarter of 2007.

“You hear a mixed bag,” Doyle said. “The maximum I’ve heard [operators charging] is $4 to $5 per month. As time goes on, the ability to charge will certainly decrease.” In a few years, Doyle added, the feature may be something that cable customers expect to be included as part of the service.

Motorola is conducting focus groups to determine where to take its integrated communications server next. One feature it’s considering, for example, is the concept of answering a phone call from the TV — an idea, Doyle noted, that has “been around since The Jetsons.”

But he was doubtful that it would actually prove popular. “I’m not sure that’s something people want to do,” Doyle said. “When you watch TV you kind of want to turn everything off.”

RINGING UP CONTENT

Cable operators have another motivation for closely linking voice, video and data, according to some — it gives them new ways to spur incremental entertainment purchases.

To Scott Dietzen, president of messaging-software company Zimbra, the core reason operators are interested in deploying integrated communications features is “monetization”: “You want to lead your customers toward content.” San Mateo, Calif.-based Zimbra is providing the underlying software for Comcast’s SmartZone unified-messaging portal.

For example, Dietzen said, a cable company could use the online calendaring features of a unified-messaging system to let customers know about upcoming pay-per-view events they may be interested in. Another tactic could be viral promotion: If you let your friends know about an upcoming video-on-demand movie premiere, you may get a credit toward a free VOD purchase.

“Messaging and collaboration software can be at the heart of harnessing the affinity of communities, and to promote content within those networks,” Dietzen said.

Others believe content distribution itself is an even stronger play for cable than integrated communications.

“I think having converged gateway devices in the home — to manage the manipulation of content — will be more compelling that just making sure you can get voicemail via e-mail,” Arris Group vice president for customer-premises equipment Bruce McClelland said. “That leverages some of the real key assets that cable operators have today over the competition.”

At least for now, not everyone’s keyed up on the fancy integrated stuff. Plenty of cable operators are simply focused on getting a competitive voice offering into the market.

There’s considerable opportunity on the table for cable companies to take away business from incumbent telcos, said Tom Buttermore, vice president and general manager of global cable solutions at Nortel Networks.

“Right now the attitude for cable is, 'Let’s get out with the me-too offering.’ There’s still a lot of hay to be made out of that,” he said. For large operators like Comcast and Time Warner Cable, “now it’s a juggernaut — they’re collecting voice subs left and right.”

Momentum Telecom Wholesale, based in Birmingham, Ala., provides private-label Internet protocol phone service to 30 cable operators with between 1,000 and 50,000 subscribers. CEO Alan Creighton said most of his company’s customers are “just getting into it and establishing confidence that they can succeed.”

Added Todd Zittrouer, Momentum Telecom’s vice president of sales: “They just want a good, basic dial-tone service.”

Dave Spear, executive vice president of product management and marketing for IP phone switch maker Cedar Point Communications, said operators always have to be careful about introducing a new feature. The danger is that it actually backfires and causes more technical-support calls.

“You don’t want to inundate consumers with too many new features at once,” Spear said. “And when you do roll these things out, you have to do education — otherwise you’ll have the call centers inundated with questions.”

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