TelcoStrategies_Factsheet.pdf

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Strategies ofTelecom OperatorsHow to retain marginsRef: M12312 June 2012

www.idate.org

Market maturity, increasedand multi-faceted competition,

a difficult macroeconomiccontext and sustained

regulatory pressure have animpact on the margins of most

operators in advancedeconomies.

This study analyses theinitiatives being taken by

telecom operators to containtheir margins, such as:

keeping costs under control,choosing investments, winningover new customers, valuation

of assets, etc.

Which avenues for reducing expenditure are worth

exploring?

Are customer management and segmenting offers

key measures?

Is increasing customer numbers a real source of

margin?

Does increasing revenue per user

also have a positive impact on margins?

Questions which are still open: subsidizinghandsets, monetizing usage, the place of

content, ?

Innovation ReportInnovation


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Contents (PDF report)

1. Executive Summary

2. Methodology

3. Operators under increasingpressure

3.1. A generally deterioratingpolitico-economic context

3.2. Mature mobile markets3.3. Exploding usage3.4. Regulatory pressures still strong3.5. Increasing competition

4. A large range of actions

for retaining margins4.1. Tightening expenditure

4.1.1. Organizational and financialmeasures

4.1.2. Operational and functionalmeasures

4.1.3. General strategy measures4.1.4. Technical and technological

measures

4.2. Increasing the customer base4.2.1. Winning and segmenting

new customers on a given market4.2.2. Winning new geographical markets4.2.3. Improving customer relationships

and experience

4.3. Increasing revenue4.3.1. Fighting against cannibalization of

some revenues4.3.2. Quality of stock, valuation of

existing subscribers4.3.3. Innovation in the offer: bundles, up-

& cross-selling

4.3.4. Increasing mobile data tariffs4.3.5. Supplying and distributing

differentiating content4.3.6. Related activities

5. Measures which are effective

to varying degrees5.1. Tightening expenditure5.2. Increasing the customer base5.3. Increasing revenue

6. Challenges and openquestions

6.1. Confirming the benefits ofsegmentation and family offers

6.2. Clarifying strategies concerningcontent

6.3. Activating converged access

and offers for quadruple playoffers6.4. Improving network resource

management6.5. Changing handset subsidies

sustainably6.6. Using identified growth avenues

for margin vectors6.7. Continuing to monetize usage

7. Telecom operator profiles America Mvil

AT&T China Mobile Deutsche Telekom France Telecom KDDI NTT Telefnica Verizon Communications Vodafone

Deliverables: Report (PDF) Slideshow (PDF)

June 2012

EUR 3 500(1-5 user licence)

Sales contact:Isabel [email protected]

Tel.: +33 (0)467 144 404

Project ManagerCarole [email protected]

Tel: +33 (0)467 144 428

Related reportsavailable:

The World TelecomServices Market

Multiplay: new supply-side strategies

Telco TV Strategies

Upcoming reports:

Future Telecom Pricing Strategies Vertical Markets FTTx services

More information at:

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IDATE - BP 4167 34092 Montpellier Cedex 5

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Developing EBITDA margins (%)

Impact of the measures explored by telecom operators

March N to March N+1Source: IDATE June 2012

Source: IDATE June 2012


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The World TelecomServices Market

Markets & Data 22nd

edition M11301_2 January 2012

This report provides asnapshot of the current

state of the telecomservices market, along with

details on global trends asthey are playing out bothregionally and nationally.

It explores the growth

dynamics in the differentmarket segments, in termsof user numbers and sales

up to 2016, along withrecent developments

among telcos, including

mergers and acquisitionsand global rankings.

The recovery is underway, with growth worldwide reachingslightly more than 3% in 2011: is the divide betweenadvanced and emerging economies widening?

Is the tremendous growth of mobile data services enough todrive a shift in revenue structure?

How much do fixed broadband and ultra-fast broadbandInternet services as well as mobile data services need to

grow to sustain lasting market growth?

Is the increasing power of certain carriers repainting theglobal telecom landscape?

>Database (Excel)Markets & Forecasts up to 2016 by country and by segment:

Fixed telephony Mobile services Fixed Internet services and data

Market & Data


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Report (pdf)Contents

1. Executive Summary1.1. The recovery is confirmed but

precarious1.2. Market trends1.3. Trends by region1.4. Mid-term forecasts

2. Methodology2.1. Database2.2. Definition of indicators and

sources

3. Mergers and acquisitions

4. Rankings4.1. Rankings by revenue4.2. Rankings by market capitalization4.1. Rankings by subscriber numbers

5. Europe6. North America7. Asia-Pacific8. Latin America9. Africa and the Middle East

Database (Excel)Indicators for each zone andcountry analysed: Historical data 2008-2010

Estimates for 2011

Forecasts 2012-2016

Key indicators Fixed telephony

- PSTN/ISDN lines- Annual change (%)- Density (% of population)

Mobile services

- Mobile subscribers- 2G subscribers - 3G subscribers- Prepaid subscribers- Postpaid

subscribers

Internet

- Internet subscribers- Dial-up subscribers- Broadband subscribers (DSL,

cable modem, FTTx subscribers,other broadband subscribers, VoIPsubscribers)

Revenue indicators Fixed telephony

Mobile services

- Mobile voice services- Mobile data services

Internet and data

- Corporate data services- Internet services

Total telecom services

Regions & countries

North America

Canada USA

Latin America

Brazil Mexico

Asia-Pacific

China India

Japan South Korea

Africa-Middle East

European Union

Austria Belgium

Bulgaria Czech Republic

Denmark Estonia

Finland France

Germany Greece Hungary Ireland

Italy Latvia

Lithuania Luxembourg

Netherlands Poland

Portugal Romania

Slovenia Slovakia

Spain Sweden

UK

Rest of Europe

Norway Russia Switzerland Turkey

Deliverables: Report (pdf) Database (Excel) Slideshow (pdf)

Publication date:January 2012

1-5 user licence:

EUR 3 500

Sales contact:

Isabel [email protected]. : +33 (0)467 144 404

(

Other available reports:

World Internet Usage &Markets

Apps & the mobileInternet

LTE - Strategies forMNOs

Trends in telco capex

Upcoming reports: Future Telecom Changes in offers &

bundles fixed/mobile Pricing strategies Vertical markets Telcos strategies

Annual services: LTE Watch Service FTTx Watch Service

- Half-yearly updateddatabase

- Monthly Insights- Analyst access

More information at

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IDATE - BP 4167 34092 Montpellier Cedex 5Tel : +33 (0) 467 144 444 Fax : +33 (0) 467 144 400 - [email protected] www.idate.org


7/31

IDATE - BP 4167 34092 Montpellier Cedex 5Tel : +33 (0) 467 144 444 Fax : +33 (0) 467 144 400 - [email protected] www.idate.org

(

Europe

Telecom services market in value

Millions, unless otherwise mentioned

2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F

USD

Fixed telephony 117 498 109 214 101 738 94 022 88 868 85 473 83 134 81 649 80 801

Mobile services 210 611 208 440 211 529 213 528 215 454 219 899 224 741 229 653 234 466

Mobile voice services 166 759 159 222 156 155 151 112 146 038 144 017 143 356 143 628 144 782

Mobile data services 43 852 49 218 55 375 62 416 69 416 75 882 81 385 86 024 89 683

Fixed Internet & data 82 204 85 665 89 250 91 718 94 870 98 966 103 338 107 735 112 035

Corporate data services 31 406 31 287 30 917 30 941 31 231 31 848 32 736 33 848 35 140

Internet services 50 798 54 377 58 333 60 777 63 639 67 117 70 601 73 887 76 895

Total telecom services 410 312 403 319 402 517 399 268 399 192 404 338 411 213 419 037 427 301

EUR

Fixed telephony 88 716 82 462 76 817 70 991 67 099 64 536 62 770 61 649 61 008

Mobile services 159 021 157 382 159 714 161 223 162 678 166 033 169 690 173 398 177 032







Source : IDATE, in "W orld Telecom Service Market", 2012 Edition

F: Forescast

Brazil

Telecom services market in value

Million currency units, unless otherwise mentioned

2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F

National currency (BRL)

Fixed telephony 43 814 42 718 40 112 38 491 37 249 36 411 35 783 35 171 34 573

Mobile services 44 712 49 859 52 800 57 030 60 738 62 637 64 477 65 870 67 086







USD

Fixed telephony 24 905 24 282 22 801 21 880 21 173 20 697 20 340 19 992 19 652

Mobile services 25 415 28 341 30 013 32 417 34 525 35 605 36 651 37 443 38 134







EUR

Fixed telephony 18 804 18 334 17 216 16 520 15 987 15 627 15 358 15 095 14 838

Mobile services 19 190 21 399 22 661 24 477 26 068 26 883 27 673 28 271 28 793







Source : IDATE, in "W orld Telecom Service Market", 2012 Edition

F: Forecast


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Bundling & selling services with

access: New supply-side strategiesBundles, content, smart access, segmentationRef: M12308April 2012

www.idate.org

This report takes a look at

the major developments

in services being bundled

with Internet access.

It analyses trends in triple and

quadruple-play bundles,

their convergence

and their economic

impact on vendors.It also explores deep product

line strategies:

digital home, rich

communication,

secure access, and

opportunities tied to

segmentation.

At a time when telecom markets are stagnating, what

possible growth outlets are there for telcos?

What are the major innovations in the area of services

bundled with access: additional services, content, smart

access, segmentation?

What are the assets and limitations of bundling

strategies? How do bundles affect ARPU, margins and

customer loyalty?

Will adding content to the equation bring growth and, if

so, for which type of operator?

Is enhancing access with other services closer to telcos

core business a sound development strategy?

Is segmentation operators main strategy for handling the

explosion in traffic on the networks?

Can telcos sell quality of service?

Innovation ReportInnovation report


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Contents (PDF report)

. Executive Summary2. Methodology

3. Introduction3.1. Background and objectives

3.2. Key factors in supply-side strategies

3.2.1.Technlogical developments

3.2.2. Structure of demand

3.2.3. Increased competition

3.2.4. Economic situation

3.2.5. Regulatory situation

3.2.6. Telcos market objectives

4. Service bundles4.1. Definition: cross-selling & bundles

4.2. Usage: bundling is a market reality

4.3. Vendors positioning on quadruple play

bundles

4.3.1. Changing positions

4.3.2. Vendors positioning with respect to the

quadruple play

4.3.3. Bundling strategies by type of vendor

4.4. The triple play

4.4.1. Triple play as industry standard and the

gradual disappearance of standalone offers

4.4.2. Examples of triple play bundles

4.5. The quadruple play4.5.1. Quadruple play bundles still a novelty

4.5.2. Examples quadruple play bundles

.6. Analysis of bundling strategies4.6.1. Triple and quadruple play pricing strategies

4.6.2. Bundles economic impact on ARPU, churn

and margins

4.6.3. How far can existing customers be

monetised?

4.6.4. Perspectives: IPTVs role in triple and

quadruple play bundles, and the search for

convergence

5. Access + content strategies

5.1. Definition

5.2. Operators positioning on offers that

include content

5.3. Must-have services Premium TV VOD PVR

5.4. Content that lends an edge

Music Games

5.5. Packages that combine different

types of content

5.6. Strategic analysis: integrator,

aggregator or provider of quality

access: which is the way to go?

6. Smart access6.1. Introduction6.2. Rich communication6.2.1. Services bundled with landline calling

6.2.2. Rich mobile communication

6.2.3. Location-based services

6.3. Digital home6.3.1. Access to content

6.3.2. The home network

6.3.3. Remote access to the home

6.4. Secure access6.4.1. Storage and security

6.4.2. Insurance

6.4.3. Payment

6.5. Opportunities in services close to

telcos core business, with

prospects for bigger margins and an

edge over the Internet giants

7. Segmenting services7.1. Segmenting access solutions to

monetise the network7.1.1. Usage-based billing

7.1.2. Speed-based billing

7.1.3. QoS offers

7.1.4. Capping traffic to educate users

7.1.5. Market opportunities tied to the type ofnetwork, and a niche target market

7.2. Family offers: targeting individuals

and their circle to secure loyalty7.2.1. Multiple-line solutions

7.2.2. Packages for typical families

7.3. Targeted offers for different

segments of the population

7.4. Trend: segmentation, a vital

challenge

8. Conclusion: several points of

leverage

9. Player profilesCompany presentation and line strategy for:

Comcast FastWeb

Free Orange France

SFR Verizon

Virgin Media UK Vodafone Spain

Telecom Italia Telefnica Spain

Deliverables:

Report (PDF)

Slideshow (PPT)

April 2012

3,500

(1 to 5-user licence)

Sales:

Isabel Jimenez

[email protected]

Tel.: +33 (0)467 144 404

Project ManagerSophie LUBRANO

[email protected]

Tel: +33 (0)467 144 425

Available related reports:

World telecom services

market

Telcos TV strategies

Future TV 2020: Taking

it to the Web

World internet usage &

markets

Upcoming reports:

Telcos strategies Future Telecom

OTT video & CDN

markets

FTTx market revenue &

Strategies

More information at:

www.idate.org

IDATE - BP 416734092 Montpellier Cedex 5

Tel: +33 (0) 467 144 444Fax: +33 (0) 467 144 400 - [email protected]


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Bundling & selling services with access (excerpts)

Source: IDATE April 2012

Source: IDATEApril 2012

Various strategies to conquer and secure customers and protect margins

Positioning strategies for services bundled with access


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New Multiplay ServiceStrategiesBundles, Content, Smart Access,SegmentationM12308 May 2012

This study includes:

- a report

- a PowerPoint presentation


12/31

LIDATE cre le DigiWorld Institute

Depuis 1977, lIDATE s'est impos, par la comptence de ses quipes dtudes spcialises,comme une rfrence dans le suivi des marchs des secteurs tlcoms, Internet et mdias.

Fort du soutien de ses membres, reprsents par prs de 40 acteurs majeurs de lconomienumrique, lInstitut a engag sous lappellation DigiWorld une nouvelle tape de sondveloppement structure autour de trois lignes d'activits :

DigiWorld Institute, un Forum europen largement ouvert sur le monde . Le DigiWorld Instituteamplifie les initiatives collectives de l'IDATE telles que le DigiWorld Summit, le DigiWorld Yearbookou les Clubs mensuels mis en place Londres, Paris et Bruxelles. Il propose ses membres departiciper des programmes de recherche collaboratifs sur les grandes problmatiques du futur del'industrie, en mobilisant les comptences dexperts extrieurs et de ses quipes

IDATE Research, un observatoire indpendantqui a pour vocation d'organiser une veille activesur l'conomie numrique, de collecter les donnes pertinentes et de proposer des analyses derfrence sur les marchs et les innovations dans les secteurs des tlcommunications, de l'Internetet des mdias travers un catalogue complet de rapports et de services de veille.

IDATE Consulting, une capacit d'analyse et de conseil . Nos quipes d'conomistes etd'ingnieurs ont tabli leur crdibilit et leur indpendance travers la ralisation de centaines demissions dtudes confies chaque anne par les grands acteurs de lindustrie et les pouvoirspublics.

Contributeurs

> Sophie LUBRANO, Responsable du ple "Usages" l'IDATE depuis novembre 2000, Sophie est spcialise dans l'analyse de lademande, en particulier sur les usages grand public. Elle dispose galement decomptences dans l'analyse de l'offre, notamment la stratgie des acteurs en matirede services sur Internet. Ses missions portent principalement sur les diffrentsdomaines des tlcoms : Internet, audiovisuel, tlphonie fixe et mobile. Auparavant,elle tait consultante-conomiste au B.I.P.E. o elle suivait les diffrents marchsdes tlcoms. Sophie est conomiste, diplme de l'ESLSCA (Ecole SuprieureLibre des Sciences Commerciales Appliques).

[email protected]

> Gilles FONTAINE, Directeur Gnral Adjoint

> Didier POUILLOT, Directeur de l'Unit "Stratgies Tlcoms"

> Stphanie VILLARET, Co-responsable du ple "Satellite"

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits rservs Toute reproduction, stockage ou diffusion, mme partiel et par tous moyens,y compris lectroniques, ne peut tre effectu sans accord crit pralable de l'IDATE.

IDATE, DigiWorld, DigiWorld Institute et DigiWorld Yearbook sont des marques internationalesdposes de lDATE

ISBN 978-2-84822-272-1

ISSN 2109-6791


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New Multiplay Service Strategies

Contents

1. Executive Summary

1.1. Context1.2. Multiplay bundles1.3. Content strategy1.4. Smart access1.5. Segmentation

2. Methodology

3. Introduction

3.1. Study context and objectives

3.2. Determining factors in offering strategies3.2.1. Technological advances3.2.2. Market structure: saturation in pay packages on one side and an explosion in usage on the

other3.2.3. Intensifying competition3.2.4. Economic outlook: stagnating revenue3.2.5. Regulatory factors3.2.6. Operators market objectives

4. Multiplay Bundles

4.1. Definition: the multiplay cross-selling strategy4.2. Consumption patterns: bundling is a market reality4.3. Operator positioning in quadruple play services4.3.1. Changes in positioning4.3.2. Operator positioning in quadruple play services4.3.3. Bundling strategies by operator type4.4. Triple play4.4.1. Triple play becoming the standard and single play gradually disappearing4.4.2. Examples of triple play packages4.5. Quadruple play4.5.1. Quadruple play still in its infancy4.5.2. Examples of quadruple play packages4.5.3. Summary4.6. Strategic analysis of multiplay bundles4.6.1. Triple and quadruple play price positioning4.6.2. Economic impact of bundling on ARPU, churn and profit margin4.6.3. Limits to leveraging existing customer base4.6.4. Outlook: triple plays threat to IPTV, waiting for full quadruple play convergence

5. Strategies Combining Access with Content

5.1. Definition5.2. Operator positioning in plans that include content5.3. Must-have services: premium TV, VOD and PVR5.3.1.

Premium TV

5.3.2. VOD5.3.3. PVR


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5.4. Differentiating with content5.4.1. Music5.4.2. Video games5.5. Packages that include multiple types of content5.6. Strategic analysis: integrator, aggregator or quality service providerwhich model is best?

6. Smart Access

6.1. Introduction6.2. Rich communication6.2.1. Home phone calling features6.2.2. Rich mobile communication6.2.3. Geolocation6.3. Digital home6.3.1. Access to content6.3.2. Home network6.3.3. Remote home access6.4. Secure access6.4.1. Storage and security6.4.2. Insurance6.4.3. Payment6.5. Opportunities in services closely related to the core business, with potential for profit and a

competitive edge over the Web titans

7. Segmentation of Offerings

7.1. Segmenting access offerings to make the network more profitable7.1.1. Billing by volume7.1.2. Billing by data speed

7.1.3. Quality of service offerings7.1.4. Limiting usage to "educate" consumers7.1.5. Market opportunities tied to type of network, and a smaller target7.2. Family plans: targeting individuals and their groups to build loyalty7.2.1. Multi-line offerings7.2.2. Packages for typical families7.3. Offerings for specific segments of the population7.4. Trend: segmentation proving to be key

8. Conclusion: A Number of Levers to Work With

9. Player Profiles9.1. Virgin Media UK9.1.1. A growth model based on cross-selling and up-selling its customer base9.1.2. Overview9.1.3. Service strategy9.2. Verizon9.2.1. Betting on super-fast broadband and mobile9.2.2. Overview9.2.3. Service strategy9.3. Comcast9.3.1. Content to retain customers, broadband to drive ARPU and quadruple play on the horizon

9.3.2. Overview9.3.3. Service strategy


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9.4. Orange France9.4.1. Offering centered around triple and quadruple play bundles including content9.4.2. Overview of the Orange group9.4.3. Orange France9.4.4. Service strategy9.4.5. Summary9.5. Free9.5.1. Low-cost-bundle approach to conquering the market9.5.2. Overview9.5.3. Service strategy9.6. SFR9.6.1. Mobile specialist turns multi-screen multiplay operator9.6.2. Overview9.6.3. Service strategy9.7. Vodafone Spain9.7.1. Overview of the Vodafone group9.7.2. General service strategy9.7.3. Vodafone Spain: synergy between fixed and mobile9.8. Telefnica Spain9.8.1. A business strategy focused on existing customers9.8.2. Overview9.8.3. Service strategy9.9. Telecom Italia9.9.1. Betting on VOD to retain current subscribers and win new customers9.9.2. Overview9.9.3. Service strategy9.10. Fastweb9.10.1.

An extension to mobile that falls short of its success in triple play

9.10.2. Overview9.10.3. Service strategy


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Tables

Table 1: A large range of multiplay bundlesTable 2 : Operator positioning in quadruple play servicesTable 3: Cable operator positioning in quadruple play services and broadband market share Table 4: Mobile operators service offeringsTable 5: Virgin Media ARPU and churn dataTable 6: Example of discounts on multiple SFR product linesTable 7: Telecom operators methods of delivering TV and video serviceTable 8: Strategies for packages that combine content and accessTable 9 : Content bundling by certain operatorsTable 10: TV consumption in the USTable 11: Cost of the Cubomusica service from Telecom ItaliaTable 12: Mobile bundles that include content from OrangeTable 13: Features of the Cubovision unicast TV and mobile video service from Telecom Italia Table 14: Telecom operators positioning in the TV value chainTable 15: Services included by Internet access planTable 16: BT fixed Internet access plansTable 17: Virgin Media Some business and financial data pointsTable 18: Breakdown of Virgin Media subscribers by bundle type as of Q3 2011Table 19: Virgin Medias basic servicesTable 20: Virgin Media double play: fixed Internet access + mobile Web with a 3G dongleTable 21: Virgin Medias multiplay bundles including TVTable 22: Virgin Medias add-on servicesTable 23: Virgin Medias Internet access-related servicesTable 24: Data on Virgin Medias fixed customersTable 25: Verizon Some business and financial data pointsTable 26: Verizon FiOS triple play bundlesTable 27: Comcast Some business and financial data pointsTable 28: Comcast's double play TV + Internet bundlesTable 29: Comcasts double play TV + voice bundlesTable 30: Comcasts triple play bundlesTable 31: Xfinity Home tabletTable 32: Orange Some business and financial data pointsTable 33: Orange France financial dataTable 34: Oranges bundlesTable 35: Free financial dataTable 36: Frees bundlesTable 37: SFR financial dataTable 38: SFRs bundlesTable 39: Vodafone Spain financial dataTable 40: Vodafone Spains bundlesTable 41: Telefnica Some business and financial data pointsTable 42: Number of Telefnica customers in Spain (Telefnica Espaa)Table 43: Description of Telefnicas triple play bundlesTable 44: Telecom Italia Some business and financial data pointsTable 45: Telecom Italia Internet figures for the Italian marketTable 46: Telecom Italias bundlesTable 47: Telecom Italias TV and video content

Table 48: Fastweb Some business and financial data pointsTable 49: Fastwebs bundles


17/31


***

Figures

Figure 1: Positioning strategies for access-based packagesFigure 2: Pay-TV penetrationFigure 3: Broadband penetration by countryFigure 4: Pay-TV household ARPUFigure 5: Increase in IP trafficFigure 6: Change in the telecommunications marketFigure 7: Penetration of bundled packages in European householdsFigure 8: Change in adoption of bundled packages in EuropeFigure 9: Bundled package subscription detailsFigure 10: Inclusion of basic services in bundled packages

Figure 11: Subscriptions rates to bundled packages by countryFigure 12: Changes in the positioning of various players in terms of service offeringsFigure 13: Market share in broadband and mobile servicesFigure 14: Operator positioning in quadruple play servicesFigure 15: Quadruple play strategies of operators in Europe and the USFigure 16: Triple play price positioningFigure 17: Growth in AT&Ts customer baseFigure 18: Increase in Virgin Medias triple play subscriber base and ARPUFigure 19: Virgin Media churn rate by bundled package typeFigure 20: Virgin Media ARPU based on churnFigure 21: Increase in the number of Virgin Media cable subscribersFigure 22: National Geographic in HDFigure 23: Triple-play fiber offers from OrangeFigure 24: Service continuity for Sky contentFigure 25: Vodafone instant messaging featureFigure 26: Example of an interface that includes communication and file/video sharing features Figure 27: Internet+ package from OrangeFigure 28: Different strategies for winning over and retaining customers and increasing ARPUFigure 29: AT&Ts data packagesFigure 30: Change in Virgin Medias subscriber base by Internet access speedFigure 31: Monitoring fixed Internet consumption with ComcastFigure 32: Change in number of Verizon FiOS and FiOS TV subscribers, 2008-2011 ..........................Figure 33: Verizon 4G/LTE coverageFigure 34: Change in number of Verizon mobile subscribersFigure 35: LTE-compatible handsets sold by VerizonFigure 36: Verizons data plansFigure 37: Broadband market share in the USFigure 38: Oranges business strategyFigure 39: Vodafone DSL routerFigure 40: MiFi router


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19/31

Telcos TV StrategiesFrom a differentiation strategy to a strategy ofinnovation

Innovation

Reports

Telcos TV services are

currently enjoying one of

the highest rates of growth

in the marketplace. Initially

a source of distinction

between ISPs, TV has

become a central part of

telcos marketing and

growth strategies. This

report takes a detailed look

at the marketing strategies

that telcos use when

marketing their TV

services, and at their

growing prominence in a

TV market in the throes of

major upheavals.

Key questions What role do television and associated servicesplay in telcos'

strategies? What type of media offers are telcos marketing and what

networks are they using to deliver them? How are telcos fitting their services into the multi-screen

universe (TV, mobile, PC...)?

What live TV servicesare on offer? How are video-on-demand

(VoD) servicesbeing incorporated?

Is there a single dominant model, and what are some of the

more innovative solutions out there? What role do telcos play in the TV market and how are they

positioning themselves?> In addition to in-depth analysis and a series of case studies, the

report provides 11 detailed company profiles.


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Telcos TV StrategiesFrom a strategy of differentiation to one of innovation

Contents

1. Executive Summary2. Methodology

3. Telcos TV services3.1. TV-based services

3.1.1. IPTV (managed networks)

Example of a new generation STB: SFR and

its TV Evolution set-top box

Vodafone Portugal, a frontrunner in the

development of a partnership with Xbox 360

AT&T U-verse on the Xbox 360

3.1.2. DTT

KPNs bundling strategy: gradual

development of an ambitious solution BT Vision: a series of partnerships to achieve

strong superfast broadband objectives Mobistar Belgium: theoretically quintuple play

solution3.1.3. Satellite

Portugal Telecom: using pay-TV as a core

development path France Telecom: varying degrees of success

for satellite depending on the marketAT&T/Verizon : DirecTV, a key partner for

American ISPs

Telefnica,proactive satellite policy, but

varying in scale from market to market3.1.4. Cable

Magyar Telekom/Deutsche Telekom: cable

losing out to IPTV and satellite services Telefnica, Perus cable heir

3.2. Mobile services

3.2.1. On broadcasting networks

Popular free services based on TV channels

in South Korea and in Japan Telcos struggling paid services

3.2.2. On unicasting networks (3G)

3.3. Computer-based services

3.3.1. Essentially an extension of the fixed or

mobile TV offer

3.3.2. But also a desire to reach the entire

online population

4. Marketing strategies for TV services4.1. Live TV services

4.1.1. The end of the bonus TV model?

France: alone in the free IPTV model

Bonus TV strategy also being employed on mobile

4.1.2. Dominant model: no TV without Internet

4.1.3. Less common: stand-alone TV services

Infrequent on telecom networks

4.2. Video on-demand offers

4.2.1. Often tied to live TV

4.2.2. Except when carriers do not offer live

programming on their own network

5. Industry organisation & strategies5.1. Telcos role in the TV market

5.1.1. Distributors above all

5.1.2. Generally service and package providers

5.1.3. More rarely content producers and/or TV

station operators

5.2. TV at the heart of telcos strategies

5.2.1. TV as an instrument of distinction for ISPs Way to attract new customers

Means of securing customer loyalty

Way to increase ARPU

5.2.2. Need to differentiate from other TV broadcasting/distribution platforms Through the STB

Through innovative services

5.3. Telcos role in the TV market

5.3.1. Still only a small footprint in the market,

but boasting the highest growth rates5.3.2. Different market positioning depending on state of local competition In cable-dominated markets, telcos are being the most innovative with TV Strategies vary in markets with a powerful pay-TV provider5.3.3. Strategies influenced by the regulatory environment

6. Carrier profiles(End of October 2011)

Methodology:

Carriers strategic positioning with respect totelevision

Description of the live TV offer

Description and pricing of television-based

TV/video services

Description of other content services and STB

features

6.1 AT&T

6.2 Belgacom

6.3 BT Vision

6.4 Free

6.5 Orange

6.6 Portugal Telecom/MEO6.7 Verizon

6.8 Telefnica Espagne

6.9 Telecom Italia

6 10 Deutsche Telekom

80 pages

PDF + Slideshow

EUR 3 500

November 2011

To order,please contact :

Isabel JIMENEZ

[email protected]: +33 (0)467 144 404

Project Manager

Florence LE BORGNE

[email protected]

tel: +33 (0)467 144 443

Other related reports:

World TV Market

Future TV- 2020 Scenarios

Hybrid TV

Next Gen TV-

Trends 2011

Ultrafast-Broadband Surveywww.idate-research.co


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Telcos' TV strategiesFrom a strategy of differentiation to one of innovation

TV & Digital Content

Innovation

Report


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Contributors

Florence LE BORGNE, Head of TV & Digital Content Practice

Florence Le Borgne, Director of Studies, joined IDATE in July 1998. She is now headof TV & Digital Content Business Unit. Florences prime area of focus is the development of digital technologies (terrestrial, cable, satellite and IPTV, mobile TV,digital cinema, video and TV on the web) dealing with both the economic andstrategic aspects of those sectors. More generally, her work involves analysis ofmedia groups strategies, chiefly in Europe and Japan. Before coming to IDATE,Florence Le Borgne worked as the Head of Research in the Nord -Pas-de-CalaisRegional Development Agency's Economic Observation department, where shedevoted herself primarily to issues relating to the Information Society, thedevelopment of telework and the mastery of key technologies. Ms. Le Borgne is agraduate of the Lille school of management EDHEC (Ecole des Hautes Etudes

Commerciales)[email protected]

Mlanie COCA, Junior Consultant

Copyright IDATE 2011, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits rservs Toute reproduction,stockage ou diffusion, mme partiel et par tousmoyens, y compris lectroniques, ne peut treeffectu sans accord crit pralable de l'IDATE.

All rights reserved. None of the contents of thispublication may be reproduced, stored in aretrieval system or transmitted in any form,including electronically, without the prior written

permission of IDATE.

ISBN 978-2-84822-286-8

ISSN 2109-6791
mailto:[email protected]:[email protected]:[email protected]


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Telcos' TV strategies

Contents

The electronic version of this report (PDF) ships with a slide presentation (PowerPoint)

1. Executive Summary .......................................................................................................... 61.1 IPTV, a natural medium/fit for telcos content strategies............................................. 6

1.1.1 TV: a core area of focus for telcos ................................................................................. 61.1.2 Growing prominence of mobile platforms ................................................................ ....... 61.1.3 Adding online services to provide content everywhere .................................................. 7

1.2 TV services sold mainly as part of broadband access bundles .................................. 71.2.1 Live programming at the core ...................................................................... .................. 71.2.2 On-demand services gaining traction, but tied to pay-TV services ................................ 8

1.3 Organisation and industry strategies ........................................................................... 81.3.1 Telcos occupy mainly the lower section of the TV/video content value chain ................ 81.3.2 TV: an element of differentiation between telcos and now the source of addedcompetition between them ............................................................................................. 91.3.3 Telcos still only minor players in the TV market, their role largely determined by the

competitive environment .............................................................................. .................. 92. Methodology .................................................................................................................... 103. Telcos TV services......................................................................................................... 12

3.1 Television services .................................................................................................... 143.1.1 IPTV (managed networks) .......................................... ................................................. 143.1.2 DTT ........................................................ ................................................................. ..... 193.1.3 Satellite ............................................................................................. ........................... 233.1.4 Cable ........................................................................................................................... 27

3.2 Mobile services .......................................................................................................... 283.2.1 Over broadcasting networks .................................................. ...................................... 283.2.2 On unicast (3G) networks ...................................................... ...................................... 32

3.3 Online TV services .................................................................................................... 363.3.1 Largely an extension of the fixed or mobile TV service ................................................ 363.3.2 But also a desire to reach all internet users ................................................................. 36

4. TV marketing strategies ................................................................................................. 394.1 Live TV offers ............................................................................................................ 39

4.1.1 The end of the TV bonus model?........................................ ...................................... 404.1.2 Most common model: no TV without internet .......................................................... ..... 414.1.3 Less common: standalone TV services ................................. ...................................... 41

4.2 Video on-demand services ........................................................................................ 424.2.1 Services often tied to live programming ................................................................ ....... 424.2.2 Except when the telco does not offer live programming on its own network ................ 43


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5. Organisation & industry strategy .................................................................................. 445.1 Telcos role in the TV market..................................................................................... 44

5.1.1 Distributors above all .................................................. ................................................. 465.1.2 Usually pay-TV package and service providers ........................................................... 46

5.2 And more seldom producers of content and/or TV channel operators ..................... 465.3 TV at the heart of telcos strategies........................................................................... 47

5.3.1 TV as an element of distinction between ISPs ........................................................ ..... 475.3.2 Need to distinguish from other TV broadcasting networks ........................................... 49

5.4 Telecom carriers role in the TV market .................................................................... 565.4.1 Still modest weight in the equation, but reporting the highest rates of increase ........... 565.4.2 Different positions depending on the state of local market competition ....................... 595.4.3 Strategies influenced by the regulatory environment ........................................... ........ 61

6. Annexes ........................................................................................................................... 636.1 AT&T ......................................................................................................................... 636.2 Belgacom ................................................................................................................... 686.3 BT Vision ................................................................................................................... 716.4 Free ........................................................................................................................... 746.5 Orange ....................................................................................................................... 766.6 Portugal Telecom/MEO ............................................................................................. 806.7 Verizon ...................................................................................................................... 836.8 Telefnica Spain ........................................................................................................ 876.9 Telecom Italia ............................................................................................................ 906.10Deutsche Telekom..................................................................................................... 946.11KPN ........................................................................................................................... 98


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Tables

Table 1 : Comparison of telcos TV and video distribution strategies.................................................. 13Table 2 : Comparaison des principales caractristiques des dcodeurs haut de gamme proposs par

certains oprateurs tlcoms europens et amricains .................................................. ..... 16Table 3: Growth in the number of Digitenne (DTT) and Interactieve TV subscribers (IPTV) .............. 20Table 4 : Main operational mobile terrestrial broadcasting services .................................................... 31Table 5 : Comparison of a selection of unicast mobile television and video services marketed by telcos 34Table 6 : Comparison of a selection of online TV services offered by telcos ....................................... 37Table 7 : Positions occupied by telcos on the TV value chain ........................................................ ..... 45Table 8: Country rankings by IPTV household numbers, 2007-2015 ................................................. 56Table 9: Change in telecom carriers share of the TV market................................. ........................... 58Table 10: Key AT&T partnerships in the realm of content ............................................................... ..... 63

***

Figures

Figure 1: Neufbox Evolution hardware ............................................... ................................................. 15Figure 2: Some of the interactive services on Meo TV ................................................................ ........ 48Figure 3: Example of a home page promoting the lowest Internet access price: Telefnica Spain ..... 49Figure 4: Example of a home page promoting the content selection: AT&T U-Verse .......................... 49Figure 5: Meo TV widgets (Portugal Telecom) .................................................................................... 51Figure 6: The Freebox V6 designed by Starck ................................................................. ................... 52Figure 7: Telecom Italias CuboVision...................................................................... ........................... 53Figure 8: Evolution of the main TV access networks global market share between 2007 and 2015.. 57Figure 9: Changes in the main TV access modes between 2010 and 2015 by geographical region ... 57Figure 10:Evolution of the MEO line of TV services ............................................................................. 82Figure 11:MEOs OTT strategy ............................................................. ................................................ 82


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2. MethodologyThe methods employed by IDATEs teams of analysts and consultants are based o n anapproach that combines:

research and validation of data collected in the field;

the application of classic industry and market analysis tools: segmentation, competitionanalysis, strategic strengths, modelling, assessment and forecasts;

the expertise of specialists who contribute their own analytical capabilities and those oftheir network of market analysts.

More specifically, the tools employed by IDATEs teams are as follows:

1/ A multi-disciplinary team of full-time consultants, specialised by sector of activityIDATEs analyses are performed primarily by our in-house consultants, and veryoccasionally by freelance market analysts. This approach allows us to capitalise on our poolof expertise through teamwork, sharing knowledge, ideas, contacts, viewpoints and key data.Each report is drafted by a team of specialists, overseen by senior consultants with a proventrack record in their field.

2/ Primary and secondary research

IDATE reports and databases are compiled based on primary data obtained from one-on-one interviews with the sectors decision-makers, and on secondary data which isestablished by cross-referencing public sources and external databases.

3/ An integrated information centre sustained by a number of tools and proprietarydatabases

Over the past 30 years, IDATE has established working and data organization methods andproprietary databases that trace the central chapters in the history of our sectors ofexpertise.

Companies: IDATEs in-house data service tracks the latest news and events to comeout of the top telecom, Internet and media industry companies around the globe.Innovative firms and start-ups are monitored by the market experts in the differentPractices.

Markets: IDATEs databases are derived from rigorous processing of fundamentaleconomic variables (GDP, investments, exchange rates, demographics, etc.) and theirrelation to decisive sector-specific and national elements (capex, national marketdynamics, etc.).

Technologies: IDATEs organization by Practice provides us with an efficient means oftracking innovation. IDATEs engineers ensure in-depth understanding of the changingshape of products and services and of the latest innovations in the marketplace.

4/ Contents of the published reports

Each IDATE market report details the structures and issues at play in the market beingexamined, the decisive forces (technologies, regulation, consumption) and the playersinvolved. Particular emphasis is given to market assessments and forecasts, as part of thecentral premise. All market reports are laid out in a clear and concise manner, and illustratedwith tables and graphs of key market data and trends.


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The process of drafting of a market report includes the following stages:

analysis of the information available in the in-house databases, and review of analysesperformed in the recent past;

based on a preliminary market segmentation and assessment, and as part of anapproved interview guide, analysts conduct interviews that enable them to validateworking hypotheses;

a market model is then established, making it possible to test the hypotheses that havean impact on the markets development, and validated by a second series of interviews;

and, finally, the reports conclusions are discussed by the members of the projectsmanagement team, and with the consultants who are experts in the different areasinvolved in the analysis;

a final proofreading and editing/revision process, prior to the production of the finalversion of the report which is delivered to the client.


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Networks & Telecom TV & InternetNetworks & Equipment Internet Services

Telecom Strategies TV & Video

Mobile

Digital ContentBroadband / FTTH Digital Home

Satellite Video Games

www.idate.org

Research Catalogue

Reports & Services

www.idate.org


29/31

Market & Data reportsExhaustive market reports: trends, players, actuals & forecasts of markets by segment and by country

Innovation reportsQualitative approach of prospective issues

Watch ServicesContinuous watch on high-potential markets including trackers, insights & live sessions with lead analysts

ivotal collections for an easy navigation between the different reports and services:

ATE presents its Market Reports Programme for 2012 which constitutes a natural extension of the wo

formed by our teams of analysts, as well as our ongoing investments in information and monitoring system

player strategies and markets.

re than just a catalogue of publications, this constitutes a concrete manifestation of our drive to create

que tool geared towards understanding and monitoring the Telecom, Internet andMediasectors.

012Research Catalogue

Ref Market intelligence reports Themes Publication Deliverables Pr

Internet Series in EMarket & Data reports - full report, database & slideshow

M11118 Mobile Video Mobile June 11 3 3

M11101 World Internet Uses & Markets Internet Services Jan. 12/July 12 6 3

M11115 M2M Internet Technologies Nov. 11 3 3

M11117 Apps & Mobile Internet - Battle of platforms: both native and web apps Internet Services Feb. 12 3 3

M12118 LBS Internet Technologies May 12 3 3

M12121 Future communication services -Scenarios 2020 Prospective Nov. 12 3 4

M12122 OTT video distribution & CDN markets Internet Services Sept. 12 3 3

Innovation reports - full report & slideshowM10211 Social TV TV & Digital Content May 10 2 2

M11111 Mobile VoIP Mobile May 11 2 3

M11112 Net Neutrality - Business models & International Benchmark Regulation Nov. 11 2 3

M11114 Open Data Internet Services May 12 2 3

M11410 Cloud - Focus Datacenter Netw orks April 12 2 3

M12113 Telco CDN Netw orks May 12 2 3 M12119 NFC - Mobile Payments Mobile June 12 2 3

M12116 Traffic Management Netw orks Oct. 12 2 3

M12120 Live OTT Internet Services Nov. 12 2 3


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More details online - Contents, Methodologies, Summaries on www.idate.org

ontact us: Isabel Jimenez - [email protected] - Tel: +33 467 144 404

Ref Market intelligence reports Themes Publication Deliverables Pri

TelecomSeries in EMarket & Data reports -full report, database & slideshow

M12310 Ultrafast-Broadband per Satellite Satellite June11/May '12 3 3 5

M11301 World Telecom Services Markets Telecom Strategies Jan. '12/Dec.'12 3 3 5

M11318 Femtocells Mobile July '11/July '12 3 3 5

M11411 SME Equipment -B2B Survey in France: Telecom, IT, Internet Survey Aug. 11 3 8 5

M11314 Radio Spectrum Mobile Sep. 11 3 3 5M11312 Trends in Telco Capex - down, but not out Telecom Strategies Nov. 11 3 3 5

M11316 Ultrafast-Broadband- B2C Survey in France, Japan, Sweden, UK, USA Survey Nov. 11 3 8 5

M12315 Satellite M2M Satellite March 12 3 3 5

M12412 Smartphones -B2B Survey in Europe Survey May 12 3 8 5

M12306 Mobile Devices Mobile June 12 3 3 5

M12311 Future Telecom -Scenarios 2020 Prospective Oct. 12 3 4 5

Innovation reports -full report & slideshowM10304 Services over FTTH/B Broadband Jan. 11 2 3 5

M10312 Satellite Markets -New Growth Engines Satellite July 11 2 3 5

M11319 Mobile Backhaul Strategies Netw orks Aug. 11 2 3 5

M11317 VDSL2 Vectoring Broadband Dec. 11 2 3 5

M11307 LTE Telcos Strategies Mobile Dec. 11 2 3 5

M12304 Next Gen Access Networks- cost models for the digital agenda 2020 Netw orks May 12 2 3 5

M12413 Smart Cities Netw orks May 12 2 3 5

M12320 FTTx Market Revenues & Strategies Broadband June 12 2 3 5

M12312 Restoring Telco Margins Telecom Strategies June 12 2 3 5

M12308 Next Gen Offers and Bundling - fixed & mobile Telecom Strategies June 12 2 3 5

M12319 Vertical Markets Telecom Strategies July 12 2 3 5

M12313 Pricing Strategies Telecom Strategies Dec. 12 2 3 5

MediaSeries

Market & Data reports -full report, database & slideshowM11212 Future Television- Scenarios 2020 Prospective July 11 3 4 5

M11200 World Television Markets TV observatory Jan. 12/July 12 6 3 5

M11201 World Video Game Markets Video Game observatory Jan. 12/July 12 6 3 5

M10118 Online Video TV & Digital Content Oct. 11 3 3 5

M11216 Digital Home & Connected Devices Consumer Electronics Oct. 11 3 3 5

M11116 eBooks Digital Content Oct. 11 3 3 5

M12212 Next Gen TV - Scenarios 2020 Prospective April 12 3 4 5

M12218 Cloud Gaming Digital Entertainment April 12 3 3 5

M12214 DTT - Switch-off stakes & emerging markets Netw orks May 12 3 3 5

M12216 World Connected Devices - Consumer Electronics CE Observatory July/Dec. 12 6 3 5

M12206 App Store Games Digital Entertainment Nov. 12 3 3 5

Innovation reports -full report & slideshowM10214 TV Groups' Quadruple-Screen Strategies TV & Digital Content Nov. 10 2 3 5

M11211 Satellite TV in Europe- Will the future of satellite be guided by 3D? Netw orks April 11 2 3 5

M11215 Hybrid TV Prospects- What impact on Connected TV? Netw orks Dec. 11 2 3 5

M11214 Telcos TV Strategies- From a strategy of differentiation to one of innovatio Telecom Strategies Dec. 11 2 3 5

M11213 Serious Games Digital Entertainment Dec. 11 2 3 5

M12210 Connected TV - Services & Interfaces, Strategies, Players, Forecasts TV & Digital Content March 12 2 3 5

M12217 Content Production Netw orks Aug. 12 2 3 5

M12215 Cable & IPTV face to cord-cutting Netw orks Nov. 12 2 3 5


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