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Demand for converged services to rocket

Converged services are rising in demand with changing consumer lifestyle, where single-service telco offerings are becoming thing of the past, says analyst.
Written by Konrad Foo, Contributor

With changing consumer lifestyles and technology convergence, service providers have employed converged services as part of their mainstream marketing strategy, Frost & Sullivan said.

In a report released Friday, the research firm said user demand are pushing service providers toward converged services to grow revenues, increase subscriber base and reduce customer churn.

"Bundling two or more services such as fixed voice, broadband, mobile and pay TV, into attractive price plans has proven to result in less customer churn than single-service offerings," said Kamlesh Kalwar, senior industry analyst at Frost & Sullivan, in the report.

He noted that single-service telco offerings may soon be a thing of the past, with tomorrow's consumers likely to demand fully converged services from a single provider as a result of changing lifestyles and technology convergence.

According to Frost & Sullivan, some 20.8 percent of households across 14 Asia-Pacific countries subscribed to dual-, triple-, and quadruple-play (quad-play) services in 2008. This amounts to a total bundled billing of US$58.7 billion, and it is expected to hit US$88.3 billion by 2014.

Dual-play service, usually a coupling of fixed-line and broadband, are currently the most commonly contracted bundles with 10.8 percent of residential users.

By 2014, triple-play services, encompassing fixed-line, broadband and television, will likely see an increase in adoption in the longer term, accounting for 11.4 percent of residential subscribers.

Quad-play services will grow nearly two-fold to 4.9 percent, but dual-play will dip to 10.2 percent household penetration.

Kalwar identified three factors that are driving the delivery of bundled services to a single user: the convergence of not only networks, but also content and devices.

With Internet protocol (IP), he noted, existing networks are capable of delivering a multitude of services, such as broadband network enabling applications like Internet, TV and voice over Internet Protocol (VoIP), with just an incremental upgrade to the core network.

Increased mobility in consumers presently emphasizes the need for multiple access points to the same content. Similarly, sophisticated devices available today support the consumers' expectations for ubiquitous access to such content.

Kalwar explained that converged services are expected to be "a critical strategy" for communication service providers in the mid- to long-term, and will reap in benefits for both service providers and users.

In fact, he said operators are already banking on this opportunity to up-sell their services and increase average revenue per user and customer loyalty.

Apart from meeting consumers' demands and maintaining revenue and customers, telcos can roll out customer loyalty programs to reward subscribers and offer one-stop customer service centers and consolidated monthly billings, Kalwar added.

However, he cautioned that pricing along is only part of the strategy.

"Quality of service, timeliness of market entry and [type of] content will also make or break an operator's converged offerings," he said. "StarHub, for example, has virtually cornered the pay-TV market in Singapore with its exclusive content rights and early introduction of services."

He noted, however, that regulation governing content and broadcast services will vary country by country.

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.

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