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IPTV Will Assume Lead Role in New Bundling Strategies

Product Type: Market Research Report
Published by: Yankee Group
Published: October 2006
Product Code: R388-2273
Description
Bundling Shows Its Effectiveness

The deployment of multiservice bundles brings together disparate elements within the operational structures of traditional telephone companies. Cable operators that deploy their own triple-play packages put pressure on carriers to market services such as video, even though it requires a completely different approach than voice and high-speed data.

One objective of deploying fiber deep into telcos’ access networks is to get the triple play of voice, high-speed data and video operating on the same infrastructure. The development of VDSL2 also enables service providers to carry all three services the last several thousand feet over existing copper loops, using IP as the unifying protocol. Regardless of the technology used, there appears to be general agreement that triple-play bundles are effective in reducing the amount of churn between service providers.

Empirical evidence from telcos and cable operators supports these findings as well. BellSouth—which offers a series of bundles under its BellSouth Answers package that combine local and long-distance voice, DSL, DIRECTV and Cingular Wireless—reported in its 1Q06 earning that 5 million residential customers, or 45% of its residential access line base, are buying at least two services from the company. This number includes 628,000 customers taking DIRECTV subscriptions as part of their BellSouth Answers package and almost 1 million Cingular subscribers.

In markets where fiber-to-the-home (FTTH) networks are deployed, the adoption rates are even greater. According to Verizon, 80% of its customers who have voice, high-speed data and video using its FiOS FTTH service, are adopting all three.
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