Policy

Q&A: Cable, Beware of Wireless

3/08/2010 2:30 PM 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 RiddlebergerEric 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.

The 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-effectively.

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.