 | Issue: | Asia-Pacific III 2012 |
| Article no.: | 14 | |
| Topic: | Telecommunications and Cable Convergence: Opportunity Knocks for India and China | |
| Author: | Ian Watterson | |
| Title: | Vice President & Managing Director (Asia Pacific) | |
| Organisation: | CSG International | |
| PDF size: | 197KB |
About author
Ian Watterson is the Vice President & Managing Director (Asia Pacific) CSG International. He was appointed VP and Managing Director APAC in March 2011. He joined CSG International in February 2006 as CFO, Americas, was appointed VP Caribbean and Latin America in January 2008 and VP Americas in October 2008. During his tenure he grew the Americas to be half of CSG’s revenue base and was responsible for numerous strategic initiatives and new customer acquisitions.
Ian’s experience spans regional operational management, corporate strategy, finance and marketing, having held senior management roles at various companies including BSkyB and Ernst & Young. Ian has over 15 years’ experience in technology and telecommunications management. He has a BA in Banking and Finance, an MBA in international finance and is a UK Chartered Accountant.
Article abstract
Huge opportunities are opened in both India and China, due to recent regulation that encourages cable and telecommunications convergence. Cable Operators see revenues leaking to OTT while Fixed Line Telcos market IPTV aggressively, competing on their traditional playground. While transforming analogue TV to digital to free up spectrum, these operators also gain the opportunity to offer communications in multi-play deals. As a recent survey shows, in emerging markets consumers are even more likely to view TV on other devices. Hybrid accounts, enabling pre-pay for some services and post-pay for others can win customers with their flexibility. All this needs multi-device, multi-technology packages that are designed to encourage loyalty, and a powerful billing system that can follow the marketing departments’ whims.
Full Article
These days, even the most casual telecom and cable industry observer is acutely aware of the evolution of the delivery and consumption of content. Not only is every market experiencing growth in content consumption, but dramatic changes are afoot in the way in which it is consumed. Nowhere is this more true than in emerging markets, with the largest of these in our region – China and India – leading the way. According to analyst firm Canalys, China accounted for 27 per cent of global smart phone shipments in the second quarter of 2012, with 42 million devices reaching the market. By comparison, the US accounted for 16 per cent of the 158 million smart phones shipped during the period. Additionally, the Chinese smart phone market grew 199 per cent year-on-year and 32 per cent compared to the previous quarter.
Consumption growth and device variation have significant implications for both Communications Service Providers (CSPs) and cable operators alike. In the cases of both China and India, there are major regulatory changes that have even more major impact, with triple- and quad-play services becoming a reality, along with TV Anywhere. At the same time, the over-the-top (OTT) players pose a major threat.
This brings us to charging and billing. To respond to the huge opportunities and significant threats, CSPs will need to ensure that their charging and billing does evolve to meet the new challenges and opportunities, by enabling bundling, real-time and prepaid charging for content and cable, shared data plans etc.
Globally, cable and mobile operators are facing challenges from over-the-top players. For CSPs, Google, Apple and other content providers are competing for consumers’ cash, while using the networks that the operators have invested in and built. Similarly, cable companies see their core revenues coming under threat as they lose market share to OTT content providers and fixed line operators aggressively marketing IPTV services bundled with their voice and data services.
CSPs and cable companies also have something in common on the regulatory front. For CSPs, bill shock and roaming regulations have cut margins, and regulatory uncertainty in countries like India has stalled investment. In the cable world, the emerging market giants, India and China, are at an interesting phase, thanks to regulatory changes which enable cable operators to deliver telecommunications services, moving from analogue to digital cable by 2014.
However, all is not doom and gloom. In the telecommunications sector, favourable demographics such as a rapidly expanding – and increasingly affluent – middle class in emerging markets have led to impressive growth. In China, 3G continues to be the main focus for mobile operators particularly in urban markets. Networks are being updated and a wide range of mobile devices being introduced to cater to different market segments. For example, the percentage of users accessing the internet via a mobile handset increased to 69.3 per cent this year (BMI, China Telecommunications Report Q3 2012). In India, the cable industry is seeing dramatic growth as a result of rapid changes in consumers’ digital consumption behaviour.
The two sectors, in both India and China, are growing much closer than would previously have been thought possible, thanks mainly to legislation. In China, cable operators have been unable to deliver telecommunications services alongside their core video offerings. Now, with the Chinese government’s blessing, the State Administration of Radio, Film and Television (SARFT) is paving the way for cable TV operators to enter the telecoms market. In India, the Ministry of Information and Broadcasting is enforcing the move from analogue to digital cable across the entire country by 2014. Digitizing the cable platform allows the release of spectrum for hundreds of channels, enables multi-play services and stimulates services such as pay-per-view, subscription and interactive television – and not just from existing cable companies.
So, CSPs and cable companies in both China and India are knocking on the door of a huge opportunity, but they will need to rise to the challenge and transform the way in which they offer new services and support customers, indeed, transform their business models. In support of this transformation, operational and business support systems (O/BSS) will need to ‘step up to the plate’ to support the new business models, new services and new convergent offerings. They will require upgrading existing cable and wireless networks, developing and manufacturing universal set-top boxes, and acquiring content delivery platforms and electronic programme guide databases. Importantly, charging and billing will play a crucial role in the monetization of the new services.
CSPs and cable operators will need to move quickly to take advantage of the opportunity. In China, for example, despite the government’s tight control of broadcasting policy that will most likely see mobile TV services adopted fairly late in the game, technical and commercial trials of triple-play services will take place over the next two years across 12 Chinese cities. Effectively packaging and charging for bundles is not easy, as a recent Accenture survey discovered: 60% of surveyed CSPs cited billing for bundled services as a major concern.
To move from today’s analogue video services to a digital television offering with voice and data services, India’s next generation cable operators will need to create a whole host of new tiered bandwidth, high speed data and content offerings to accommodate a wide variance in customer usage patterns and preferences. Such initiatives must be backed by technology, with charging and billing again at the forefront. It is vital that charging and billing can support diverse subscription models, set-top box subsidies, triple and quad-play bundles and OTT content delivery models.
The good news is that operators in emerging countries such as China and India have an opportunity to learn from, and then ‘leap-frog,’ those in more developed countries. Consider Comcast, for example: it is the largest cable TV provider in the USA who has recently embraced the model of delivering video to its customers onto their iPads. In order to keep viewers, Comcast must deliver content on the devices its customers are demanding, with ‘TV Anywhere’ becoming a stock phrase. A Global TV Replacement Study released recently by NPD DisplaySearch found that consumers in emerging markets were even more likely to use other devices, such as smart phones and tablets, to view television content.
Therefore, operators who can manage their charging and billing as well as content delivery networks and digital locker technology have an opportunity to provide content – in a wide variety of formats on a wide variety of devices – to a hungry audience. Moves like Comcast’s enhance consumer loyalty and encourage them to adopt an ever-increasing range of services. It is extremely important to make it easier to select from that broad range of services.
Enabling these offerings is not easy. For charging and billing, the ability to charge for any event, regardless of source or format, is of course critical. Charging algorithms need to be flexible enough to adapt to new business models – and the whims of the marketing department. Bundling is vital, as is the ease of understanding the bill – or self-care display – by the consumer. Real-time charging will become increasingly important in the cable space as it is already in the telecommunications sector. Pre-paid and pay-per-view offerings, as part of a package designed to encourage loyalty amongst consumers that are regarded as least likely to be loyal, are likely to become common. Hybrid accounts, enabling pre-pay for some services and post-pay for others, are likely to be used to entice the wealthier consumers who nevertheless are concerned about budgetary control. Policy management will also play a key role in charging and billing, enabling parental control over both content and spend.
Both China and India have been opened to the opportunities offered by the convergence of cable and telecommunications by legislation of their respective governments. It will be fascinating in the near future to see which service providers grasp these opportunities. With charging and billing evolving to meet the demands of new business models, new services and new consumers, it will be equally fascinating to see how flexible charging can be used to fully grasp these opportunities.
