The mobility opportunity for fixed telephony and TV operators

The availability of increasingly sophisticated softphone applications and TV anywhere applications coupled with the widespread adoption of smart devices, provides fixed operators with an opportunity to enhance their services with mobility. And while it may not always be possible to monetise the mobility aspect directly, the enhancements provide significant value to customers, making them more likely to keep their fixed telephony and cable TV services and possibly even upgrade.

With softphone apps from companies such as CounterPath, fixed telephony operators can add mobility with minimal effort and cost. In developed markets smartphone penetration is already high and is increasing fast which means that a large proportion of fixed network customers could install a Skype-like app provided by their fixed telephony company. Many people are loath to give up their fixed phone and by giving them the opportunity to make and receive “fixed line” calls away from home the value of the fixed line is much enhanced. Furthermore, instead of a voice only product fixed operators can leverage those smartphones and tablets to offer rich communications including video calls. Thus even at home, answering a fixed call on a smartphone connected to WiFi will be much more attractive to telephony users than using their old fixed voice phone.

Increasingly large LTE bundles and proliferation of free WiFi or access via the phone network make it easy for fixed operators to effectively become OTT mobile players without investing a cent in mobile access networks. Upselling opportunities may exist by offering households additional personal fixed numbers with home call management features (call home, call one, transfer, group video call). The differentiator compared to Skype and other OTT services is that a fixed operator softphone app is linked to the existing home phone account. Customers can use their existing account and bundled minutes even when away from home. Most importantly, customers benefit from universal nature of the PSTN because they can fall back to the lowest common denominator of a simple voice call to any telephone number world-wide.

While fixed telephony operators who can benefit most from this opportunity are those who do not have a mobile offer, even those who have a mobile offer may see this this as an opportunity if their mobile rivals do not have a fixed network.  While a few operators already have softphone app offerings in the market, as yet this is an under-exploited opportunity.

A fixed network OTT app is particularly valuable when used abroad. In February 2013, Syniverse published research which showed that “transient roamers” spent $8.7 billion on hotel Wifi and $3.9 billion was spent purchasing access to other paid Wifi hotspots.  While traditional fixed operators may not be able to garner this revenue, it shows the value that people attach to being reachable and making calls without using cellular networks.

These developments mean that IP telephony is no longer a threat to fixed operators but an opportunity to deliver rich communications services to their customers anywhere world-wide.

However, the greatest opportunity lies with triple play operators (telephony, broadband, TV). An app which combines a softphone with a TV anywhere services would represent a huge value add to cable TV customers. Already TV consumption is moving rapidly away from TVs to other devices such as tablets, smartphones and laptops. Internet based TV delivery is racing ahead. Recognising this trend, several TV providers in Europe and North America offer apps that allow their customers to watch their favourite shows on other devices. Within the home the ability to watch TV on a tablet adds another outlet which is of proven value to cable TV customers.  The ability to use a cable subscription out of the home is of course even more valuable. This need not be restricted to Wifi because with LTE mobile TV, at least in a limited manner, is already reality.

In an ideal world a family with a holiday home in another country could simply take their home phone and cable TV channel package with them and access all services through a broadband connection at their holiday home.   While there may be issues over geographic limits of contents rights, these could be overcome. Certainly within the EU it will not be sustainable to restrict the consumption of digital content depending on which EU country it was purchased in.

For cable TV companies this would also be a defensive move as young people opt to watch on-line video rather than pay for cable TV. According to figures published by eMarketer, in 2013 for the first time adults in the US spend more time consuming major media on smartphones, tablets and laptops as opposed to TV. This illustrates that we have reached a turning point which will lead to a great deal of disruption in the telecoms and digital media industries.

Stefan Zehle, CEO, Coleago Consulting