Australia - Digital Media - Bundled Services

Australia - Digital Media - Bundled Services

The original concept of bundling services such as telephony, broadband, TV and mobile is linked to the old telco way of thinking it is based on locking customers into their services rather than creating new customer benefits. The bundling of entertainment services is an increasingly prevalent feature of fixed broadband markets. The bundled price is usually offered at a discount to the combined standalone price of the included services. This creates stickiness' among customers, who see the benefit of having all services one bill. Operators also find benefits in billing processes, and in lower customer churn. Telstra and Optus have long offered a bundled package that includes satellite or cable subscription TV. A number of ISPs are also bundling Internet Protocol TV (IPTV) services, largely from Foxtel and Fetch TV.

Essentially, bundled services should stand for the ability to deliver access to all forms of communication over a single connection. Telcos and ISPs need to make this possible. The services they can offer should be aligned with this and should include security, storage, billing, and all kinds of extra enhancement, depending on the specific applications for example, a games hobbyist has different bandwidth requirements from a video downloader.

Globally, telcos essentially remain network operators and telecom service providers; they have not been very successful at selling content. Although there is a stimulus from the current interest in IPTV, many telcos are still trying to hang onto the old model.

However, given the popularity and growing use of devices such as smartphones, tablets and smart TVs the traditional bundled services model will soon disappear.

The deployment of the NBN has gathered pace in recent months: some 840,000 premises were passed by the network by April 2015, and 3.6 million premises are scheduled to be connected by mid-2016 and all premises are to be connected by 2020, providing access to data rates of at least 25Mb/s, with most having access to at least 50Mb/s. With Internet Service Providers (ISPs) channelling their services through the NBN, the telecommunications, entertainment, video and multimedia markets in Australia will undergo sweeping changes during the next few years. This is characterised by the increasing array of products and services that can be delivered to consumers over this infrastructure.

The connected or smart TV is becoming a major entertainment hub of the digital home, with Gigabit WiFi and WiFi repeaters bringing signals to laptops, tablets and smartphones around the house.

Pay and cable TV operators, telecommunications firms, consumer electronics and IT companies are all competing to provide various digital media services. These services require a large amount of bandwidth, and as such are typically provided over high-speed connections based on fibre optical or hybrid-fibre-coaxial (HFC) networks.

Until recently the prices for the combined packages offered by Optus and Telstra have not been priced sufficiently low to attract large number of customers. Yet there is now a range of different offerings that provide competitive access to a variety of services and, as such, bundles as an access solution are becoming vanilla products rather than an upfront sales channel. The entry of Foxtel into the bundled services market in early 2015 may benefit both itself and Telstra, on whose copper network Foxtel's broadband and telephony services run. The broadening footprint of the NBN will also be crucial for the success of Foxtel's offering, which will tap into the NBN as that network is expanded progressively. To some degree Foxtel is anticipating the competitive pressure expected from OTT operators such as Netflix for subscription TV.

Key developments:

Triple play, quad play, smartphones, tablets, smartTV, IPTV, VoIP, media centre, cloud computing.

Companies mentioned in this report include:

Telstra, Optus, TPG, TransACT, Google, Apple, Facebook, ACCC, Foxtel

1. Synopsis
2. NBN ideal business changing the bundled services model
3. Streaming Video - IPTV
4. Broadband Voice Services (VoIP)
5. The elements of a bundled service
5.1 Access
5.2 Content
5.3 Appliances
6. Bundles as a basis for new pricing models
6.1 Lower costs open up access to new models
6.2 Price key to bundled packages
6.3 Bundles on offer
7. What went wrong with bundled services, mark I - analysis
7.1 Failing telco models
7.2 VoIP and video hard nuts to crack
7.3 TV camera in front of radio programs
7.4 The failure of portals
8. The future of bundled services - analysis
8.1 Diversification of video content
8.2 Tele-presence will be a killer app
8.3 Different Customer service models
8.4 Bundled model moving to the cloud
8.5 Foxtel bundled offerings
9. The ACCC on bundled services monopolies
9.1 Change to Telstra's record keeping rule (RKR)
10. Related reports
Table 1 Telstra bundled package May 2015
Table 2 Optus contract bundled package May 2015
Table 3 Foxtel bundled package May 2015
Table 4 iiNet subscribers by type 2012 - 2015
Table 5 M2 revenue by service (proportion) FY2014
Table 6 TPG bundled broadband subscriber base 2012 - 2014

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