Cable TV operators, facing fierce competition from telco IPTV, satellite and over-the-top (OTT) providers such as Netflix, are looking for ways to leverage their enormous investments in fiber networks and strengthen their profitability. As they do so, many may be overlooking some customers and revenue streams that could contribute to stronger subscriber loyalty and healthy returns on those huge network investments.
The customers at stake are those in the United States who make international long-distance (ILD) calls and spend billions of dollars every year in the process. Leading cable TV operators realize that if they ignore this market segment, they are voluntarily handing market share and revenues to their competitors.
Large international calling market up for grabs
A 2012 survey by the market research firm Harris Interactive revealed that approximately 20 million people, or 21 percent of United States adults who own a smartphone, make international calls. In making these business and/or personal calls to other countries, these smartphone owners together spend about $38 billion annually. As everyone knows, the number of smartphone owners in the U.S. just keeps growing, which means the number of international calls is rising, too.
Obviously there are many people in the ILD market segment who do not have a smartphone, a tablet or even a personal computer. How are these customers calling abroad? An earlier Harris Interactive survey found that nearly 60 million people in the United States, or one out of every four adults, makes international calls, with just over half of these callers using landlines or VoIP platforms to make those calls, while 44 percent use a mobile device and 25 percent use over-the-top (OTT) platforms such as Skype. Regardless of the calling method, the survey results showed that each of these customers spends about $34 per month, for a total of almost $24 billion annually.
Among the subscribers who regularly make international calls are immigrants calling their home countries, people calling family members who are in the military and deployed overseas, individuals staying in touch with their international friends and, in the global economy, people making international business calls.
Competing choices for making overseas calls
Traditionally, subscribers have placed international calls from their landline phones, often in conjunction with prepaid calling cards, which they typically purchased at convenience stores and grocery stores. That has turned out to be an expensive choice; many subscribers have learned not to trust the advertised minutes or rates because hidden fees often reduce the card's actual value.
With their growing reliance on wireless communications, many subscribers now use their cell phones to call overseas, although some have experienced "sticker shock" from the high costs charged by many mobile operators.
In addition, with the emergence of Web-based portals, which eliminate the need for physical calling cards, many other subscribers have migrated to digital long-distance products sold in stores or online. Retailers today sell a "virtual calling card" which enables subscribers to use their phone numbers as their PINs. Subscribers can make international calls directly from their phones without having to remember a long, unique PIN number that changes when the balance runs out on their calling cards. Topping up their accounts by going either to the store or the store's Web site, subscribers create a dual benefit for retailers: a loyal customer base and a recurring revenue stream.
A strategy to recapture ILD customers and revenues
Leading cable TV operators now are taking back their ILD subscribers, and the associated revenues, previously captured by OTT service providers such as Skype and Viber. Rather than permitting OTT providers to use cable-network bandwidth to earn revenues, cable TV operators understandably want to use that bandwidth to generate revenues for themselves. They are informing both existing and potential subscribers that they can, in fact, place international calls from their home landline phones, often at a lower cost than calling cards and far more conveniently than using Web-based portals.
By taking advantage of cloud-based ILD platforms, available as either stand-alone solutions or add-on capabilities to existing triple-play plans, these cable TV operators offer their subscribers various calling options, including:
• Pay-as-you-go international calling; allows subscribers to add a fixed dollar amount, for example, $5, $10, etc., to their ILD account, which either the cable TV operator or the platform provider manages
• Unlimited international calling; allows subscribers to pay a fixed monthly amount for unlimited calling to a set number of popular countries; the platform provider shares the revenue from the subscription and manages the carrier rates and subscriber’s usage, thereby eliminating any risk for the cable TV operator in supplying the unlimited international minutes.
By bundling competitively-priced international calling plans with domestic calling/texting/ data plans or by offering them as an add-on service, and by emphasizing the high-quality connections of the cable broadband infrastructure, these cable TV operators are differentiating themselves from their competitors in a crowded marketplace. In doing so, they strengthen their long-term profitability by:
• Retaining existing subscribers and attracting new ones
• Generating additional revenue streams
• Maintaining their own brands and further strengthening subscriber loyalty
• Leveraging the flexibility of a cloud-based ILD platform and thereby avoiding both CapEx and OpEx costs
ILD services help grow market share and strengthen profitability
An ILD platform solution offers cable TV operators the opportunity to increase their ILD revenues dramatically within months and to sustain that revenue growth over the long term. Further, the migration/integration process from the previous solution to the cloud-based platform requires only a few weeks to complete.
Cable TV operators can further enhance the importance of cable-connectivity services within their subscribers' personal and professional lives. By providing convenient, cost-effective, flexible and high-quality ILD service, leading cable TV operators are satisfying the needs of the ILD market segment and strengthening their own long-term profitability.