Conneu nov2011-cloud servicesincreasingarpu

Cloud Services: Increasing ARPU

Special Research SessionPresenter:Brett SappingtonDirector of ResearchParks Associates

Trends in Service Provider Strategies Initial Strategy Revised Strategy Customer Acquisition Customer Retention Access Provider Content Resource Dumb Pipe / Channel Lineup Consumer Experience Linear Content On-Demand Content TV-based Video Delivery Multiscreen Delivery Core Services Adding VAS Monetizing VAS CPE-based Services Cloud-based Services© Parks Associates, 2011.

% "Highly Likely" to use services i.e., rating 6-7 on a 7-pt. scale 10% 15% 0% 5% 8% 3% 5% 6% 6% U.S. 5% 6% 3% 5% 5% 5% 5% 7% France 4% 8% 8% 10% 5% 7% UK 5% 6% 7% 8% 4% 7% 3% 4% (Among Broadband HHs) 5% Spain 5% 2% Premium Technical Support Services 6% 3% 5% 5% 7% Italy 3% 6% 5% 6% 8% 10% 6% 6% 6% Germany 6% Likelihood of using Professional Technical Support Services 8% 9% 5%4

Home Automation / Control Smart home features have existed for years. Are they moving mainstream? Options: Benefits: • Lighting controls • Traditionally for high end homes • Thermostat controls • Enables advanced features for • Appliance / power controls security, energy, and health • Vertical-specific controls • Hardware costs have fallen • Other • Consumers more open to convergence / control features Challenges: • Operators have tried before • Limited as a standalone service • Fragmented market among potential vendors / partners© Parks Associates, 2011. 5

Home Security Services Demand for Security Value-added Services “How interested are you in receiving any of the following services from your broadband Internet service provider?” Home monitoring service with a self-installed Home security service with sensors and camera and ability to see home video online controller to receive alerts Italy Italy US US Spain UK Want Service (6-7 rating) UK Spain Have Service from BSP France FranceGermany Germany 0% 5% 10% 15% 20% 0% 5% 10% 15% 20% % of Broadband HH % of Broadband HHSource: Cloud-based Value-added Services© 2011 Parks Associates

Health Services Health and wellness services are a very early market with growth potential Options: Benefits: • Senior care • Valued by consumers who need such • Routine care services • Wellness / preventive care • Provides services for aging • Chronic condition monitoring population • Sports / active care • Safety / baby monitoring Challenges: • Fragmented market • Multiple vendors with solutions only for specific health issues • Self-pay for services • Sales channel • B2B vs. B2C© Parks Associates, 2011. 7

Convergence Services Benefits: • Encourages multiplay Companion Device Services • Encourages higher service tiers • TV Listings • Programming Challenges: information • More complex support issues • Remote DVR programming • Social Interaction Combined mobile and broadband features available to those with both services. Same ID and passwords for mobile and Internet features. Merged mail boxes. Access My Unified Services online photo album via mobile or PC. Use virtual wallet on PC and mobile. Increased e-mail storage. Allows consumers to view landline voice mail via smartphone or PC. Requires Voicemail Viewer download of app to viewing device. Internet parental controls application to allow parents to customize access and Smart Controls activity permissions for online and television. Provided for free with broadband and television services, respectively. Version for mobile phone available for $5 per month. Displays fixed line caller ID on the TV or Internet connected computer. Allows calls to Universal Caller ID be pushed to voice mail. Requires triple play. No additional charge. 8© Parks Associates, 2011.

Strategies for Value-added Service Pricing VAS Offered For Free Fee-Based VAS • Services that drive bundling • Services other operators cannot easily • Services that minimize support calls / truck duplicate rolls • Services with an ongoing cost or hardware that • Services that minimize churn, particularly for must be subsidized fiber services • Services with an incremental cost for content • Services that minimize cord-cutting / cord- (music, gaming, video) trimming • Mobile-specific services • Services that drive usage of the service or • Premium tiers of free value-added services push consumers to higher tiers of service • Technical support services that address “out of • Low cost, network-based features that provide scope” issues for the operator differentiation • Value-added services that are building a • Basic levels of service that promote adoption business outside of core access services of fee-based service tiers • Services that enhance advertising • Services that encourage new Internet users to get online© Parks Associates, 2011.

Growth of Value-added Services Global Forecast: Annual Cloud-based Value-added Service Revenues by Type of Service 9,000.0 8,000.0 Convergence Services 7,000.0 Health Services Annual Revenues ($ M) Monitoring and Smart Home Services 6,000.0 Entertainment (video, music, gaming) Premium Technincal Support 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 0.0 2010 2011 2012 2013 2014 2015 Source: Cloud-based Value-added Services © 2011 Parks Associates

Conneu nov2011-cloud servicesincreasingarpu

by Rob Blaauboer on Nov 27, 2011

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