Derrel Duplechin of CCG and I will be in Austin this week at the Broadband Communities Summit. We will be putting on a seminar on Wednesday afternoon on the topic of Revenues Beyond the Triple Play. If you happen to be coming to the convention we’d love to see you at the session, or look us up.
I feel lucky to have gotten this topic to discuss. If you have been reading this blog you know that we at CCG feel strongly that every triple play provider should be putting energy into developing new products. The revenues we derive from voice are continuing to decline and cable TV is headed down the same path. The time to react to this eventual train wreck is now, while you still have the margins from those products, and not wait until your cash is squeezed.
Every triple play carrier is going to face a pretty simple choice at some time in the near future – either retract your company and become an ISP and sell nothing more than fast data pipes to your customers, or else start implementing new products to replace the sinking triple play products. If you choose to become a dumb pipe provider your future is really simple. You’ll need to strip out employees and systems and become a pure ISP and do nothing but provide the fastest pipe you can create.
If you elect to remain as a full-service provider you have a much more challenging task. No one or two or even three products is going to replace the revenues and margins you have been getting from voice and cable. Rather than have a few products that most of your customers buy, you are going to need a lot of products that only have a 5% to 10% penetration. There are no more big magic bullets. I offered to help one company look at their future was told that they would pay to have me come see them if I could tell them what the next big product is. That is exactly the wrong question to ask because there isn’t going to be one. The small carrier industry has frankly gotten a bit spoiled in that we had products that were relatively easy to sell. But those days are over and we are going to have to do what many other businesses do and scramble for every customer and every dime we can make
Both choices I have laid out are probably valid ones, and both are very different than what we do today. For instance, if you choose to be nothing more than an ISP you are going to have to dismantle most of your company and staff to stay profitable. It can be done. and if you want a model of what that looks like look at the many WISPs in the marketplace today.
But if you choose the full service provider route what will you sell? There are a number of potential products you can sell today and many more coming in the future. Today you can consider products like security, energy management, home automation, wireless MVNO, IP Centrex and OTT Video. You can also do what we call crossing the threshold, meaning that you make a product out of having your technicians do whatever businesses need in the telecom and computer space. We know companies doing each of these products and they can all be moderately successful.
There are also a lot of interesting things coming. Home automation is the very first step of getting into the Internet of Things. This is going to quickly grow into areas like medical monitoring, crop monitoring, flock and herd monitoring. And mostly the things that are coming we haven’t thought of yet as carrier products.
The biggest challenge of transitioning to many new products is to figure out a way to be efficient with new product development. You can no longer take a year or two to put together a new product. You have to roll them out quickly and learn how to sell them efficiently. You will have to do this in-house or collaborate with other carriers. If you can figure this out you will probably thrive and survive. But if you don’t do anything and stay blindly on today’s path, at some point you will no longer be viable and will fail. Our industry has never faced such a divergent set of options and this is both a scary time and an exciting time to be in the business.
Derrel great synopsis of the state of the telecom industry. My observation is that the companies that get it are arming their networks with the best current technology for dynamic and rapid product to market delivery, and the other companies are floundering or being acquired. The best technology enabled company networks will win this one. I have a travel conflict and won’t see you in Austin but will look for you at the NECA EXPO next month in FL. Darrell Merschak, National Sales Manager, Carrier Management Systems Inc.