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Consumer Communication Services Preferences


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  • 1. Consumer Communication Services Preferences The New Quad Play is a Dual Play Mike Jude, Ph.D., Program Manager Consumer Communication Services August 5, 2014 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • 2. 2 Functional Expertise • 30 years of experience in telecommunications and IT which includes technology application, market research, consulting, and operations management. Particular expertise in: - Decision Analytics - Market and Business Analysis - Developing Innovation and Encouraging Creativity Industry Expertise Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives in - Local Exchange Telephone Service Providers - Broadband and Wireless Telecommunications Providers - Network Automation Technology - Service Automation What I bring to the Team Quantitative and Qualitative Research Design Decision Analysis Public Policy Expertise Career Highlights Extensive expertise in Telecommunications and IT. Management positions in several leading technology firms: - U.S. WEST, Denver, Colorado - SUN Microsystems, Broomfield, Colorado Education • B.S.E.E. University of Colorado • M.E.E.M. University of Colorado • Ph.D. Walden University Mike Jude Mike Jude, Ph.D. Program Manager Frost & Sullivan North America Remote Today’s Presenter:
  • 3. 3 Focus Points • Consumer communication services preferences are shifting from traditional quad play bundles to a new quad play • The new quad play is a dual play: broadband access (wired and wireless) plus over-the-top service offerings • This is transformational and will further accelerate the erosion of conventional voice and video subscription offerings • Operators are in the position of enabling their own competition • Operators, though, can be significant players in this new evolving market • However, the new over-the-top service space demands a new service delivery approach
  • 4. 4 Poll Question How important do you think the evolution of consumer communication services to all IP is? 1. Doesn’t matter: won’t change the dynamics of service delivery 2. It might matter a little: mostly just a technology change 3. It is probably important: consumers may change their consumption habits 4. It is very important: it will change the entire competitive dynamic of the market
  • 5. 5 Why is this important • The nature of consumer service delivery networks is changing: evolution to IP • As IP becomes more pervasive, the number of service providers expands exponentially • This is good news for online service providers, but could be bad news for network operators (telecoms and cable MSOs) • This presentation will outline the situation, describe some of the implications and discuss opportunities and issues • The story, though, starts with the consumer…
  • 6. Consumer Preferences
  • 7. 7 Consumer Preferences • Subscriptions to conventional voice and video services are declining • Yet, subscriptions to broadband access (wired and wireless) and over-the-top service offerings are increasing • Since overall consumer communication services market revenue figures are increasing, the implication is that people are shifting their focus from traditional quad play services to a new dual play model
  • 8. 8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Local landline Subscription TV Wireless Internet 3.8 4.0 4.1 4.7 MeanScore(Scaleof1to5) Service What Services do Consumers Value? N=1,980 Source: Frost & Sullivan
  • 9. 9 Voice Subscriptions (North America) Source: Frost & Sullivan
  • 10. 10 0% 10% 20% 30% 40% 50% 60% I have a cellular phone or other alternative It was too expensive I was moving Other It was less convenient Poor customer service Poor connectivity Landline features were too limited Landline service is not available PercentofSample Reasons for Dropping Voice Subscriptions N= 520 Source: Frost & Sullivan
  • 11. 11 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%PercentofSample Reasons for Keeping Voice Subscriptions N=1,554 Source: Frost & Sullivan
  • 12. 12 Video Subscriptions (North America) Source: Frost & Sullivan
  • 13. 13 Internet Subscriptions (North America) Source: Frost & Sullivan
  • 14. 14 Wireless Subscriptions ( North America) Source: Frost & Sullivan
  • 15. 15 An OTT World
  • 16. 16 An OTT World • More and more communication services are available over-the- top (OTT) • As broadband access becomes pervasive, consumers are increasingly comfortable using an Internet connection to obtain services • OTT makes bundles and service packages much easier to integrate • Content is leading the way
  • 17. 17 Many players (many non-traditional) can now be considered communication service providers Source: Frost & Sullivan
  • 18. 18 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2013 2014 2015 2016 2017 2018 2019 Revenue($millions) Video Min Video Nom Video Max OTT Video Revenue (Global Projected) Source: Frost & Sullivan
  • 19. 19 Yes 41.6% No 58.4% Streaming Video Use (North America 2014) N= 2,029 Source: Frost & Sullivan
  • 20. 20 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Taking surveys Other None Online gaming/gambling Classified advertising/directory assistance Investment/financial research Job search Applications (personal productivity, etc.) Instant messaging Online games (excluding gaming/gambling) Auctions (Ebay, Craig's List, etc.) Research other than shopping-related Videos Shopping-related research Navigation/maps/directions News (text or video) Social networking Shopping (other than classified ads and auctions) Banking/bill paying E-mail Percentage of Respondents OTT Services Used N=1,576 Source: Frost & Sullivan
  • 21. 21 Opportunities, but Challenges
  • 22. 22 Opportunities, but Challenges • Opportunities • Many new market entrants • Broadband access increases the footprint of any OTT player to be potentially global in scope • With nearly pervasive 4G LTE access, services can also be delivered to mobile users • Innovative offerings that include content, retail, and GPS such as Augmented Reality are possible • Challenges • Declining traditional revenue sources • Increasing competition/noisy market • Content licensing • Access compensation • Infrastructure Investment • Increasing Regulatory Interest
  • 23. 23 0 200 400 600 800 1,000 1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mar-13 SubscribersinMillions Facebook: The Largest Telecom in the World? Source: Facebook Source: Frost & Sullivan
  • 24. 24 Speed Driving Migration? Yes, negatively 22.9%Yes, positively 28.7% No 29.1% Don’t know 19.3% Does connection speed impact the quality of the service? N=1,493 Source: Frost & Sullivan
  • 25. 25 Desire for a Higher Speed? Yes 31.6% No 22.8% Depends on price 45.6% N=1,573 Source: Frost & Sullivan
  • 26. 26 Need for a New Multi-player Service Architecture? Source: Frost & Sullivan
  • 27. 27 Conclusions
  • 28. 28 Key Take-Aways • Broadband access and OTT services redefining the consumer space • Within five years, most sources of network operator high margin revenue will be under competitive attack • Regulators will likely attempt to establish a presence in the market • Operators need to think in terms of complete OTT packages that can be delivered regardless of subscriber location or mode of access • OTT players must think in terms of more complete service offerings
  • 29. 29 Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) Email: myfrost@frost.com
  • 30. 30 Your Feedback is Important to Us Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. What would you like to see from Frost & Sullivan?
  • 31. 31 https://twitter.com/FS_ITVision Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan https://www.linkedin.com/groups/Future-Growth-Opportunities-in-ICT-4876870 http://www.slideshare.net/FrostandSullivan
  • 32. 32 For Additional Information Clarissa Castaneda Corporate Communications Information & Communication Technologies (210) 447-8481 Clarissa.castaneda@frost.com Mike Jude Program Manager: Consumer Communications Services Stratecast (303) 466-2377 Mike.jude@frost.com Mike Suby Vice President of Research Stratecast (720) 344-4860 Mike.suby@frost.com Perry Somers Director of Business Development Stratecast (360) 416-4982 psomers@frost.com