Sunday, June 04, 2006

European Telcos Go For Four

BusinessWeek reports on the drive in Europe for "quad-play deals that bundle fixed, mobile, broadband and digital TV." According to the article, France Télécom (FTE) is changing names and "rebranding nearly all its businesses with the name of its mobile-phone unit, Orange. In the process, it could become one of the first phone companies in the world to offer a so-called "quadruple play of telecom services: mobile and fixed-line calling, plus broadband Internet access and digital TV -- all sold in a single package."

European network operators Vodafone (VOD) and BT (BT)as well as British cable operator NTL are also going the quad=play route.

While Orange is furthest along, "the company won't immediately begin offering seamless packages of services to all customers. Among the issues still to be tackled: setting up unified billing and customer-service operations for its far-flung holdings." Lars Godell at Forrester Research said, "All they have done so far is make an announcement."

Godell noted the so-called "triple play" of fixed-phone, broadband, and television is still a work in progress.
The article states Orange "will roll out its new services gradually. The offerings available immediately will include a package deal for British customers including mobile-phone and broadband service for $56 a month. In France, where the company already offers phone-Internet-TV packages to individual customers, it will expand its offerings to business clients, allowing them to buy blocks of telephone time that can be used either on fixed or mobile phone lines."

Discussing the operators' attraction to bundled services, Martin Olausson at Strategy Analytics said, "When you sign people up for these deals, it reduces your churn rate. Your services become stickier and stickier, and it becomes more difficult [for rivals] to steal away your customers."

The article cites a recent Forrester survey of consumers in seven major Western European markets last year that found "only about one-third said they would be interested in receiving phone, Internet, and TV services as a package. Currently, only about 5% of customers Europe-wide are triple-play subscribers with Britain topping the list at 10% and France and Spain in second place at 8% each."

The survey found that price is key For residential customers, and Olausson at Strategy Analytics thought "Orange's $56-a-month offering in Britain should do well, since many existing broadband-alone services cost almost that much."

As for business customers, Forrester's Godell believed bigger corporations "want to be able to pick and choose. They have their own dedicated IT and telecom staffs, and they want best of breed."