Michael McCluskey, VP product management at Enghouse Networks talks about the challenges facing European Telcos, evolving business models and the advantages of a cloud based TVaaS model in delivering an advanced user experience.
European telcos are under pressure to invest in fibre upgrades and 5G mobile without a clear path to making a return. What can they do to mitigate the risk and what role can video play?
The business case for fibre upgrades and 5G deployment is similar to any technology deployment – it has to be based on increased/secured revenue and reduced costs. Video is an attractive and sticky service for consumers, but it is also a challenging business area as content costs are rising and competition increasing. By offering video services as part of their bundle, operators can increase revenues and reduce churn. They can also look to address new revenue streams via advertising and new markets via verticals. Enghouse Networks has more than 50 solutions catering to telcos to help them generate more revenue streams. Our recent acquisition of Espial has added a state-of-the-art IPTV solution in our bank of solutions and products.
Why does it make sense for service providers to migrate to IP video?
Cable operators may not offer IP video, and for them, this may be a transition, but many telcos have been offering IP video for years. The real transformation is a digital transformation enabling a business transformation around how operators run their business, and technology is a key enabler of this.
We believe this transformation is focused around four key imperatives:
i. Transform how you reach, acquire, and onboard customers: target subscribers where they are using the web and social media and onboard them in a fully automated manner
ii. Centre your customer view around lifetime value: continuously monitor consumer usage of the service and adjust the offer based on this feedback to ensure always happy consumers
iii. Differentiate on customer service: be proactive in addressing issues – don’t wait for calls to the call centre
iv. Adopt new business models that drive new revenue: More granular segmentation, advertisement options, and verticals
What new video services and applications could be enabled by 5G?
5G can offer multiple opportunities for video delivery. Operators who do not provide video services over mobile can video services to their offer to increase stickiness and revenues. Operators can use 5G as an alternative for fibre or other access – expanding addressable markets by reaching a broader range of subscribers. 5G offers the capacity for 4K video and VR/AR services.
What are the main challenges facing providers in delivering advanced video services across multiple networks and devices?
The video industry is fast changing with direct to consumer (D2C) and OTT services exploding. The cost of content continues to rise to place pressure on margins. Content contracts can require significant restrictions around services (e.g., time-shift services, ad-skipping, black-outs, delivery location/devices) that need to be supported for any deployment. Support for legacy devices/technologies may be required for existing deployments for some time. New business models continue to evolve around advertisements – mainly targeted/high-value ads and around two-sided business models required by advertisers and content owners.
What are the main options for service providers looking to provide an advanced TV user experience on set-top boxes as well as other connected devices and to what extent does it make sense to lean on cloud technology to deliver this?
a) There are really two high level approaches: build and operate it or outsource the build and operate (TVaaS) – either approach can leverage cloud technologies and approaches.
b) The traditional build and operate approach is challenging as it usually triggers a high business investment risk:
i. High up-front investment
ii. Long time to revenue
iii. A ‘build it and they will come model’ that means forecasts need to be accurate
iv. Ongoing investment for support, innovation and refresh
c) The TVaaS approach completely removes the business risk:
i. Low up-front investment
ii. Fast time to revenue
iii. A build it as they come model which keeps costs in line with revenues independent of forecast accuracy
iv. Costs for support, innovation and refresh are included
d) Cloud-based TVaaS approaches are much better-suited to the video business vs traditional approaches. Our Elevate IPTV solution is based on the cloud-based TVaaS approach.
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