In the competitive world of telecommunications service providers, vendors are under increasing pressure to expand revenues while reducing customer churn.
As a result, telcos are seeking to take value-added offerings to market. One of the most effective ways of doing this is through "service bundling" - packaging together multiple services in a single-product offering. It is basic marketing theory that service packages can lead to improved subscriber retention, increased revenue per user and reduced churn by offering customers a simplified "one-stop" approach to obtaining and managing related services. For example, we are seeing partnerships between petrol stations and grocery chains, banks now offer online banking, insurance and home loans, just as phone companies are offering combined telephone, Internet and PayTV packages for home buyers.
In the telco industry, providers are seeking to offer a "triple play" service offering where voice, data and a video service are provided by the one vendor.
The issue for telcos is being able to deliver this service effectively and at a price that will be accepted by the market. Will the many companies currently offering data services be able to provide these services with their current infrastructure? It is a matter of survival.
In Europe and the US a number of companies are already delivering these services effectively to their respective customer bases.
Why is Australia lagging behind? In part, technology is to blame for holding up the rollout of such packaged services across Australia.
Only recently have products been released that allow broadband connections with the capability of triple play services.
The delivery of voice and data is the easy part. It is the bandwidth needed for streaming video that requires many telcos to upgrade their core infrastructure if they are to support these services.
In some cases core switch systems may need a forklift upgrade, which is a costly exercise.
Companies like TransACT in the ACT certainly are leading the charge in the triple play services in Australia by delivering video and data to households throughout the ACT.
Now that the technology is available, it will be interesting to see who delivers this service effectively and whether it becomes a cost-viable solution.
Mark Jackson is general manager of Allied Telesyn International (Australia)