Cable Could Prosper with Messaging Services
Integrating MMS/SMS capabilities gives MSOs a piece of the mobile market.
Never before have consumers had so many communication options. Voice, email, short message service (SMS), multimedia message service (MMS), instant messaging and social networking are nearly ubiquitous. As more services show up on multiple platforms, consumers no longer view different media as separate services, but instead as a set of integrated communication features. Users want to be able to shift conversations seamlessly from one channel to another, such as mobile phone to tablet or PC to set-top box.
Network operators are transforming their network infrastructure to support these converging communication services. Once developed in independent silos and optimized to support a unique service, networks are merging to support a new unified communications future.
As convergence takes place at both the service and network levels, the lines between traditional services offered by wireless network operators and multichannel video programming distributors (MVPDs) are also blurring. A growing number of wireless operators are adding services to draw customers from MSOs’ fixed data and video offerings.
MSOs can fight back – and are. By taking advantage of existing network and video assets, MSOs entering the wireless market can offer new, creative consumer services that will differentiate their offerings and enhance their overall market position.
MSOs EXPAND SCOPE OF SERVICES
In the U.S. today, 57 percent of households are considered “multi-play,” according to a new Strategy Analytics report, meaning they subscribe to at least two communication services from a single provider. By 2016, 13 percent of American households will subscribe to a quad play that includes fixed voice, mobile voice, high-speed Internet and television, the report notes.
AT&T’s U-verse provides such a bundle today, as does Verizon’s FiOS offering. According to Strategy Analytics, more than 75 percent of AT&T’s U-verse cable customers subscribe to either triple- or quad-play bundles, earning AT&T an average revenue per user (ARPU) of $170 per month for triple-play customers.
Responding to the entry of wireless network operators into MSOs’ traditional fixed data and video market, MSOs are developing wireless strategies using several approaches. A pure mobile virtual network operator (MVNO) model enables the MSO to enter the market quickly by utilizing the spectrum and infrastructure of an established mobile operator. Using a modified MVNO strategy, the MSO can extend its reach while building out its own wireless networks – in light of recent events, most likely Wi-Fi.
MESSAGING: CRITICAL TO WIRELESS PLAY
A wireless strategy has three key components: voice, messaging and data. While voice service represents the largest portion of revenues, wireless network operators look to messaging services to further boost ARPU. In fact, in 2011, SMS and MMS will comprise nearly 56 percent of mobile data revenues in North America, according to Portio Research. Combined SMS and MMS revenues were $34.8 billion in 2010, and Portio projects they will grow to $58.5 billion by year-end 2015.
While SMS and MMS are an essential part of any wireless strategy, MSOs can take advantage of network and device convergence to create advanced services in addition to standard messaging.
For example, new technology can direct messages to a specific device based on a user’s current presence and preferences, and conversations can be transferred from PC to mobile phone or tablet as a experisubscriber’s location and communication medium changes. Historically, a subscriber’s identity has been locked to a specific device – such as a number associated with a mobile phone and an alphanumeric address tied to an email – but the new communication norm will support a single identity that spans any device type, be it set-top box, PC, phone or tablet. MSOs are ideally positioned to take advantage of this single identity, coupled with their access to content. For example, they could provide services such as video-on-demand, regardless of device type.
Evolving technology can also enable MSOs to dynamically deliver localized content, such as regional/local news, sports and event content, to any connected device based on the subscriber’s location. Likewise, operators can provide highly personalized content based on the subscriber’s demographics, preferences and profiles.
MSOs can also leverage their established subscriber base by providing application service providers with access to their network and services using open APIs and standard interfaces. Operators can open up key services such as voice, messaging, location and charging interfaces to allow for unique and innovative service creation. For example, a video application service could offer subscribers the ability to create a mash-up, combining a live or prerecorded video with a creative background and music for a nominal fee. The MSO would benefit by receiving a portion of the revenue, while the application provider could expand its application’s reach. In another application, an operator could offer services that translate messages from one language to another or that add subtitles to live video.
MSOs can also leverage existing devices, such as set-top boxes, to deliver new media – including text messaging and social network notifications. New devices such as mobile phones with builtin cameras interconnected with set-top boxes and televisions could also be used to offer video chat in the living room.
Given their established subscriber base, MSOs can provide customers with new, unique offerings without the need to be service innovators. This minimizes the overall risk and costs associated with developing, launching and marketing the next “killer app,” since MSOs only need to expose the network services and provide access to their subscribers for charging, delivery and service creation. The MSO directly benefits from a revenue share with the application service provider and from increased subscriber use of services, such as voice, video, data and messaging. The MSO can also generate additional revenue by providing hosting services to application developers with guaranteed throughput and enhanced quality of service and security.
To position themselves to support a converged communication ecosystem, MSOs would be best served by launching their own high-quality mobile service that meets subscribers’ demand for continuity on all connected devices, whether at home or on the go, although there are alternatives that we discuss below.
Using a pure or modified MVNO strategy, MSOs have the ability to launch new services quickly. Partnering with an existing wireless network operator also enables MSOs to extend their reach beyond their primary service areas to offer a quality service nationwide.
Next, MSOs can deploy an IP Multimedia Subsystem (IMS) network, a service platform that can deliver core services such as voice, messaging and video over the all-IP network.
Although there are alternatives to deploying IMS that enable MSOs to offer these services, an IMS network ensures a high quality of service, policy enforcement, interoperability, and inherent routing and charging capabilities.
In addition, it enables operators to provide enhanced messaging services such as Rich Communication Suite (RCS), an industry initiative that leverages IMS. Using the address book as the foundation for communication, RCS solutions provide users with current presence information for each contact.
Subscribers can also transfer messaging sessions from one device to another – for example, from their PC at home to a mobile phone as they travel. By offering subscribers this type of enhanced messaging experience, MSOs can mitigate subscribers’ use of over-the-top (OTT) services such as Facebook Messenger, iMessage, Skype, Google, MSN and Yahoo.
The latest version of RCS, known as RCS-e (“e” for enhanced), enables instant messaging, live video sharing and file transfer across any device with any network operator. Operators such as Deutsche Telekom, Orange FT, Telecom Italia, Telefónica and Vodafone already have announced plans to launch RCS-e in early 2012.
As RCS gains momentum, RCS clients will be available throughout the communication ecosystem, installed on PCs, tablets and mobile phones, and possibly even built into set-top boxes or automobiles. Likewise, operators’ networks will continue to evolve into fully converged communications networks, supporting the Open Mobile Alliance (OMA) Converged IP Messaging (CPM) network architecture.
By evolving to CPM, operators enable their networks to support emerging communication features, as well as standards-based interworking with legacy voice, messaging and data networks. This is essential to ensure a seamless experience with a high quality of service for voice, messaging and data services that subscribers use today.
To deploy IMS and offer both basic and advanced messaging services, MSOs can purchase the required hardware/software and manage the services and associated infrastructure in-house. Alternatively, they can look to a hosted solution as a strategy for minimizing both capital and operational expenditures required to support these new services. This approach enables MSOs to rely on the hosted solution provider for technical expertise while freeing up internal resources to focus on the core business. As their subscriber counts grow, MSOs can consider shifting to a turnkey solution when their business needs dictate a different strategy.
MSOs that are not ready to launch a wireless play have other options that can increase the value of their existing services. For example, by working with an application developer to create an operator-branded, Skype-like communication application, MSOs can enhance the capabilities and reach of subscribers’ existing landline numbers.
Such a service could deliver messaging, voice, and even video chat services to tablets, PCs, set-top boxes and other portable devices using Wi-Fi and the devices’ IP connection. To maximize the value of this type of offering, MSOs should ensure that new messaging services are interoperable with standard SMS and MMS messaging services, rather than creating a closed community serving only their subscribers.
Some MSOs, such as Comcast with its Xfinity service, currently give subscribers the ability to watch video on multiple devices, including the television, tablet and PC. By extending this capability to offer additional services, MSOs can more effectively compete with popular OTT players, even without a complete wireless offering.
MSOs offering a range of enhanced messaging services as part of their overall wireless strategy will be able to fully compete in the new communication ecosystem. By taking advantage of network and device convergence – coupled with access to content and an established subscriber base – MSOs are uniquely positioned to offer subscribers advanced messaging services beyond standard SMS and MMS.
Such services, whether provided by MSOs directly or offered through collaboration with application providers, offer an important way for MSOs to compete – both with OTT players and with wireless network operators entering the traditional cable space.
An IMS network and support for RCS are critical first steps as MSOs move toward a fully converged network. Once the migration to a CPM platform is complete, MSOs can support truly unified communications across technologies, devices and media.