Steven Hartley leader of Ovum’s industry, communications and broadband practice discusses the European ‘quad-play’ market
While there are undoubted benefits to offering mobile, fixed-line, broadband and TV as a single package, major hurdles remain to its implementation. As operators look to differentiate from triple- play offers, home broadband subscriptions with mobile plans attached will grow rapidly. However, quadplay’s slow uptake to date should not be forgotten, despite promises of ‘stickiness’ and incremental revenue.
There is much to do before operators can leverage the opportunity – and even then it may be a poisoned chalice.
The number of quadplay bundle subscriptions in Ovum’s broadband bundle forecasts will soar from nine million in 2013 to almost 46 million by 2019, a 31 per cent CAGR.
Western Europe will see particularly strong growth, as incumbents leverage their mobile assets in response to increasing triple-play penetration.
France, Portugal and Spain have already seen rapid quadplay growth and will continue to lead, with quadplay penetration well over 30 per cent of the consumer broadband base in 2019.
Bundles of any sort promise reduced churn rates and incremental revenues and quadplay is no exception.
In France, Orange has seen that broadband customers on its Open quadplay plans have a churn rate three percentage points lower than those not.
And for cable providers lacking mobile infrastructure, such as Virgin Media in the UK, there is a new revenue stream if an MVNO deal is available.
Quadplay constituted just 1.5 per cent of global consumer broadband subscriptions in 2013. This is set to rise to 6 per cent in 2019.
Therefore, growth may be rapid, but absolute numbers will fall far behind dual-play (186 million subscriptions in 2019) and triple-play (224 million).
This is due to the fundamental challenges of quadplay. Strategically, discounts on ever-more products risks cannibalising existing revenues.
Delivering a single bill for fixed and mobile services involves expensive and time-consuming back office upgrades.
Previously-separate sales channels must be optimised to sell combined products and sales teams trained.
Providers new to mobile must source and distribute devices. Consumers who are usually conditioned to treat fixed and mobile separately will need educating.
And finally there’s the challenge of co-ordinating multiple mobile and fixed broadband contract end-dates.
Today, mobile is the easiest quadplay element for a rival to target, so encouraging customers to make the transition is difficult.
Ultimately, operators must get better at delivering multi- screen content and services that emphasise the benefits of having all communication and connectivity services from one provider.
Until then, quadplay risks undermining revenues, disrupting operations and damaging profitability.