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Consumer Communication Services Preferences: The New Quad Play is a Dual Play

  • January 2014
  • 26 pages
  • Frost & Sullivan
Report ID: 2003751

Summary

Table of Contents

This report explores the data set from the most recent Stratecast Consumer Preferences Survey. This report also provides significant interest to communication service provider decision makers and to those technology vendors who offer service solutions to the carriers.

Executive Summary

Since the end of the last century, when telecommunications was fundamentally redefined by the United States Congress and the FCC in the Telecommunications Act of 1996, the Holy Grail for network operators has been to offer a complete quad play: voice, video, broadband access, and wireless. In fact, market players who could not do so were perceived to be at a significant competitive disadvantage. However, with the advent of pervasive Internet access, survey data indicate that the market is evolving towards a new dynamic: one in which services are simply applications that ride on an Internet Protocol (IP)-based connection. And, this connection can be wired or wireless.

This year’s Consumer Communication Services Preferences Survey indicates that consumers, worried about their economic futures and the implications of new government programs, such as the Affordable Care Act, are increasingly focused on the value proposition that their communication services deliver. Given this concern for value and utility, many consumers have discovered that for services such as voice telephone and subscription television, a broadband connection is sufficient. Furthermore, mobility, which now has penetrated every age and income demographic, provides a robust data-enabled connection wherever the consumer might be. Armed with these broadband connections to access services, many consumers are finding that they need buy nothing else.

Survey data does indicate that consumers are still interested in bundled services. In fact, given the option of buying services à la carte or in a bundle, most would prefer a bundle. This preference is currently driven by a need for convenience and to obtain a better overall price for services. Correspondingly, Stratecast is seeing increasing consumer preference for the capabilities that a bundled package provides.

Yet, the new bundle that is evolving is unlikely to be a quad play (voice, video, Internet access, and wireless), but is increasingly a dual play of landline and wireless broadband. Services, increasingly, are looking more like applications, and are easily downloaded from an app store. Consumers are already voting with their wallets; and, as more conventional communication services become virtualized as over-the-top offerings, they will decide that such services are not only desirable, but also more convenient.

rather than just branded functional services. This transformation will require substantial investments in service automation, and hard examinations into pricing schemes, bundle composition, and a new regulatory regime.

So, 2014 is likely to be the year of the new quad play: with two primary delivery modalities (wireless and landline broadband) and an infinite number of service offerings delivered over those connections. This year’s survey provides evidence that this evolution is happening, and happening quickly. Stratecast|Frost & Sullivan stands ready to assist its clients to navigate what is almost certainly going to be a tumultuous market transformation.

Introduction

This report marks a milestone: Stratecast has conducted consumer preference surveys for five consecutive years. The objective is to ascertain what residential consumers think of their communication service providers and the quality of the service offerings, as well as consumers’ sensitivity to service pricing.

Over time, Stratecast has found that these consumer preference surveys are a bellwether of upcoming trends in the market. For example, Stratecast was one of the first market analysis firms to note the growing importance of bundled service offerings. Likewise, Stratecast was able to predict the growing importance of the connected home; and now all of the major telecommunication carriers are exploring this emerging market opportunity.

This survey also reveals a major new dynamic that will undoubtedly redefine the market for the next several years. This year’s data show that consumers are beginning to define their bundle experiences as services provided over broadband pipes. In fact, the new quad play is actually a dual play: Internet broadband and wireless. All other services (voice, and video) can be, and increasingly are, delivered over these connections.

Although, the venerable quad play will remain for a considerable time, the new data-enabled dual play will, over time, define new high-end service offerings. Already, carriers such as Comcast are experimenting with pure data-enabled service plays. Such offerings will ultimately define the norm, rather than the exception, and mark the arrival of a new broadband world.

This report explores the data set from the most recent Stratecast Consumer Preferences Survey. This report also provides significant interest to communication service provider decision makers and to those technology vendors who offer service solutions to the carriers.

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