BUILDING ON THE THREE Cs

Incumbent telephone companies are currently engaged in the race to parity — they must first add video services to their product portfolio to match the cable industry's major push into telephony. Even as they do so, however, telco executives know that just getting a video product to market isn't enough, they must also be able to differentiate their bundled service, both to lure new customers and to retain the current customer base.

To provide that differentiation, telcos are focusing on how to leverage their existing expertise in messaging, customer service and support in combination with the capabilities that IP-based networking can provide them.

As a result, telco triple-play — or more likely, quadruple-play — services will be heavy on the three Cs — convergence, customer control and customization.

“One of the real differentiators over time is the ability to create a number of different services and give the user control,” said Jeff Weber, senior vice president for marketing at SBC Communications, at the recent Telecom '05 conference. The key, he added, is to create new and different flavors of applications, targeted to specific users — relatively easy from an IPTV set-top or other device — without having to deploy new technology for each application.

The first step, said Frank Wiener, vice president of field marketing for Calix, a vendor of broadband loop carrier systems, is to build the broadband relationship on which all the rest is delivered.

“The strategic imperative is to establish the broadband relationship because that is what they are going to use to deliver the services and revenues of the future,” he said. “It's not just about video — in fact, they are struggling with the business case on video. The margins just aren't very compelling. To the extent that there is money to be made, it goes straight to the content creator.

“But video is the enabler, and we are on the brink of an entertainment revolution that will change everything that we have known for the last 40 years when video was built around broadcast schedules and 30-minute programming increments.”

The other revolution is in communications — specifically, converging wireline and wireless services so that customers can have a single number that operates as a fixed or mobile service depending on location. At one point, the incumbent telcos appeared to have an advantage in this arena, but the recent joint venture between Sprint and four major cable players, including Advance/Newhouse Communications, Comcast, Cox Communications and Time Warner Cable (see story on page 6), has gone a long way toward leveling that playing field.

What distinguishes the converged services may also come down to customization and the ability not just to incorporate presence into how and where voice calls are delivered but to add a layer of intelligence to that process, said Bill Smith, BellSouth chief technology officer. So not only does a dual-mode handset know when the customer has moved from a wireless environment to a home Wi-Fi environment, but it also distinguishes each member of the household.

“When I get a call, I don't want the phone to ring in my teenage daughters' rooms, and I certainly don't want my phone to ring when they get a call,” Smith said in a CTO panel discussion at Telecom '05.