News

Cable, Beware of Wireless

3/11/2010 8:02 AM Eastern

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.

September