Service providers need to focus on the channel

Michael Philpott/Ovum
03 Sep 2009

Back in the late 1990s when the telecoms industry first developed broadband technologies such as DSL, it was the wealth of opportunities that the technology would create that excited service providers.

Broadband access has provided a good revenue source and has been highly profitable for many, but service providers have never been able to take full advantage of the other opportunities that broadband access provides.

IPTV and video on demand (VoD) have been a success for some but, certainly from a profitability point of view, will not be an option for all.

Many of the other opportunities often highlighted, such as online music, gaming and even technical support and content backup, have also been taken up by other players and therefore have become fiercely competitive markets.

One issue that service providers will have to tackle if they are to get back in the game is a more prominent marketing channel into the consumer home.

Often the main points of customer contact for the broadband service provider are when the customer first signs up to the broadband service and when something goes wrong – with only the odd email flyer in between.

Operators can try to and do take advantage of these main points of contact, but to be really successful they need to be looking for innovative and eye-catching ways of opening up more consistent communication channels with their customer base.

Ovum is pleased to see that such innovation is starting to enter the market.

Those few service providers that still have a successful Internet portal are starting to innovate around that as a way of entertaining, helping, communicating with and upselling services to both potential and existing client bases.

Others that do not have a successful portal are starting to experiment with free services to gain the initial traction, and then looking for ways to further upsell services on top of the initial offering.

One pilot by a tier-one player in the US found that such a strategy increased its marketing success rate over traditional methods by 200%, as well as gaining:

- a significant increase in awareness of value-added services – 615% increase in web traffic for the music service

- an increase in service uptake – 55% increase in new security subscriptions

- a decrease in service churn – 20% decrease in security service churn.

Such innovation has been a long time in coming, but it is certainly not too late. If they are to successfully grow consumer revenues in the long-term, operators will need to continue to innovate not only in both the services and applications they offer but also how in they market and deliver those services.

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