With the right focus on billing relationships, cable MSOs could give everyone a run for their money.
For cable providers, aka MSOs, the terrestrial hemispheres in which they operate are tangential at best to their strategies. Their opportunities and challenges are similar the world over. They must leverage multiple modes of access to transform from providers of entertainment and broadband into full-service multimedia players capable of playing rival to the biggest telecom or Internet players today and in the future.
However, succeeding in that mission does require some new mapping in their cerebral hemispheres. On one side, they must hone new skills in wireless and enterprise networking. And on the other, they must develop a new appreciation for how the back office can be used to blend their new and existing talents to make them more competitive.
From the Golden Horseshoe in Southern Ontario to the birthplace of Tango music in Buenos Aires, cable companies are making aggressive moves into the enterprise, into wireless and into the world of e-commerce.
Tom Vari, chief information officer and senior vice president of application delivery at Rogers Communications; Rodrigo Duclos, chief technology officer of Net Servicos in Brazil; and Roberto Nobile, chief operating officer at CableVision in Argentina came together in Management World Americas in Orlando to discuss their forward strategies. I also caught up with Philip Meeks, vice president of Cox Business in Atlanta, about his company’s push into the enterprise.
The Customer Experience Gap
Listening to these cable market leaders, one thing becomes abundantly clear: They believe the opportunities they pursue are large and attainable, but they also believe the door has been left wide open to their pursuit by competitors who have not taken the customer experience seriously enough.
“The customer experience is an absolute key for all of us,” Vari said.
When these guys talk about the customer experience, they’re not talking about what Vari described as the “touchy-feely” kind of experience. They’re talking about fundamentals and about measuring the success of those fundamentals.
“The main thing is to live up to your promises. As much as you can do that, you’re fine,” Duclos said. By that he means that your technician should show up when he says he’ll show up. Your services should work the way you advertise they will.
It took a while for Net Servicos to develop the skills and acquire the tools that allowed it to go confidently into the home to install and fix services, some of which may have been out of its comfort zone. But today, Duclos said, “We are one of the few companies in the country that have the confidence of the consumer to open their homes to us to install everything from their cable to PCs and home theatres.”
It’s the same in Argentina, Nobile said. “We are the only ones entering customers’ homes,” he said. “The biggest challenge is understanding the people’s [needs] and being in the home with them.”
Vari added that while the best experience needs to be a technically improved one, it does require a more personal touch. And that means more than just an in-person visit from a polite, well-trained technician. Nobile added that the whole industry is trying to figure out the winning strategy, but he believes, “It is a combination of all these other things, but backed by a solid IT infrastructure that can help a company see each customer as an individual.”
What cable companies need are more of those individuals, but as Vari said, in a mature market they are harder to come by. “Each new customer is a fight because the customer has to come from somewhere else,” he said. “Keeping a customer is a lot less expensive than getting a new one, but attracting new customers through new products and exploring new customer segments is also important.”
Segue to Segments
One of the more successful new segments for cable providers is in the enterprise space, especially the small- to medium-sized business market that some experts say telecom service providers have taken for granted far too long.
Still, it’s hard to match all those years of enterprise networking experience earned by the telcos. Vendors can help. They often act as trusted advisors and provide technical support and managed network and operations services. But Vari found through Rogers’ foray into the enterprise market that sales could be just as difficult.
“Three years ago through acquisition we entered this market and recognized that enterprises required a different kind of sales force and [new] customer relationship management,” Vari said. “We learned it’s about exploiting assets you have, not technically, but on the ground, to take near-plant enterprises and offer them the kind of enhanced services they need.”
Currently, cable providers collectively have approximately a 20% market share of the Ethernet business services market, which is projected to reach $38.9 billion worldwide by 2013, according to the Vertical Systems Group. Infonetics Research puts the Ethernet services market at $33 billion in the same time frame, with 10G speeds being the fastest growing.
Partly for strategic purposes and partly because of regulation, in 2009, CableVision Argentina separated its enterprise and residential divisions. Its enterprise division has gone hard after government business, having partnered with Telmex a couple of years ago and it’s looking for more vendor partnerships within that space today.
However, his company is facing some uphill battles with regulators. “Argentina has one of the worst cases of regulatory [hurdles] in Latin America,” Nobile said. In November the government there passed a new bill that breaks the company into pieces and sets a 35% market share cap on any company. CableVision currently has almost 50% of the market. The government also set a maximum of 24 licenses within the country, CableVision has 150. So the company has some tough changes to make and is currently readying its court battle.
In mid-December, the government of Argentina issued a resolution temporarily suspending the proposed merger between cable operators Multicanal and Cablevision.
“If you were Comcast or Time Warner and in Argentina, you couldn’t survive. What’s worse is this new law goes against acquired rights. We have invested over $500 million in the last two years and we don’t know if these assets are ours or not,” Nobile said.
In Brazil, at least for Net Servicos, the story is quite different. “Regulation for Latin America is very important and very strong and defines the industry,” Duclos said. “Our plea is that regulation should always look at different infrastructure providers and promote competition through different platforms.”
Still, Net Servicos has not gone the enterprise route itself. It has relied on its partnership with Embratel. Duclos said his company is experimenting in the enterprise space with some trials, but that it is focused on the mass market. “It requires a different tool set and skills to address that market,” he said. “We see, as it matures, the industry going in this direction. There is a huge opportunity but together with Embratel, our stockholder, we are targeting this market.”
In the U.S., Cox Communications has laid down the gauntlet in its pursuit of the enterprise. By next year the company expects its enterprise business to reach $1 billion, said Philip Meeks, vice president of Cox Business. It will do so by winning the kind of business it announced in October with Securities America, which consolidated services from four incumbent carriers with Cox Business. The Omaha, Neb.-based financial services company manages more than $34 billion in client assets and needed a new data centre and transport network for voice, data, internet and video to support its 1,900 financial agents. Cox Business supplied fibre Ethernet and primary rate interface (PRI) connectivity between Securities America’s two new Omaha locations and its remote data center in Kansa City.
Cox Business now serves 250,000 small and regional businesses, is the fourth largest provider of business Ethernet in the U.S. and claims to be the seventh largest voice service provider with more than 650,000 business phone lines.
“We’ve earned the right to be called a trusted provider. We have delivered on our aspiration to be ‘carrier grade,’” Meeks said.
It soon may have the chance to deliver on its aspiration to be a fully converged service provider by adding wireless to its service portfolio. In December, Cox Communications announced that it would introduce wireless phone and mobile high-speed Internet services in 2010 beginning in Hampton Roads, Va., Omaha, Neb., and Orange County, Calif.
The initial offering will be a residential service; however the company will deliver business class services to Cox Business customers in the future.
“Our portfolio has been connectivity-centric to this point,” said Kristine Faulkner, vice president of product development and management for Cox Business. “But we’re building a richer experience and looking at wireless as well as managed services.”
Over the Top and Through the Goods
During a panel discussion in which Duclos, Nobile and Vari took part, the audience was polled on what it collectively thought was the biggest opportunity in front of cable providers. Curiously, only 16% said the enterprise opportunity was biggest. Most in the audience said taking advantage of a current lackluster customer experience was the biggest opportunity. Wireless barely registered. This could be explained by the fact that the majority of the audience was more closely aligned with traditional telecom service providers — either working for one or supporting them — so it may be they just didn’t want to encourage MSOs to keep going after their enterprise customers or get any big ideas about the quad play.
And admittedly, everyone can stand to improve on the overall customer experience. But there is another opportunity that hasn’t received as much attention. According to Kelly Anderson, director of MVO Solutions at Openet, the opportunity is in e-commerce. Anderson used to be head of the Cable Markets Sector at the TM Forum and used to head up IPDR.org. IPDR is a protocol that provides information about IP-based service usage, performance and other activities and was adopted by the cable industry as part of the DOCSIS standard. So Anderson is very familiar with the needs and capabilities of MSOs.
She refers to e-commerce as the type of capabilities enabled by service like TV Anywhere that offer a way for MSOs to stay in the value chain and future-proof the billing relationship.
At the end of November, Rogers debuted a version of a TV Anywhere service that lets customers access television shows and movies from a Web site that delivers it over a wireless device, internet device or their home TV. Initially seen as a potential death knell for cable TV providers, positioning the company to exploit that content may just be opening salvo in cable’s e-commerce play, Anderson said.
“TV Anywhere is a way to get those Internet users who are getting their content online and make sure it is related to the brand they are getting at home and conceivably already trust,” Anderson said. “It’s another touch point that MSOs didn’t have before. There is a great opportunity to touch their customers not just through the television, but online as well.”
“However, that opportunity becomes slim if the billing relationship with the user is not maintained,” Anderson said. “Being able to easily pay to watch online, on the TV or on a wireless device or get other content online is key to having a branded e-commerce strategy. It’s like you are keeping the relationship going instead of giving the customer no other alternative but to use off-platform content.”
Callings its service “Rogers On Demand Online," the company will allow its paid subscribers to get free internet access to much of what they receive at home using an authentication system, much like Comcast and Time Warner Cable are doing in the U.S.
Extending the billing capabilities to other content to reinforce the brand association was one of the drivers behind Openet’s eWallet Solution in November. It allows subscribers to services from multiscreen video providers to buy content, goods and services across multiple devices. Since service providers can’t compete on content generation, they must leverage the billing and charging capabilities already in place. Doing so saves content providers and even competitors the trouble of duplicating an already sophisticated billing system while simultaneously maintaining the MSO’s billing relationship with the customer. That billing relationship is directly related to other competitive aspects of the customer relationship, such as maintaining the knowledge base about them and the ability to support them through customer care and customer relationship management capabilities. It also puts the MSO (or whoever owns the billing relationship) smack dab in the middle of the advertising chain.
To enable all this, Openet’s eWallet Solution provides customized payment rules, the ability to pay with loyalty points — something MSOs and ILECs both have taken much too long to provide — and interfaces with other back-office systems.
“Openet’s part is definitely allowing customers to get every perk and benefit that comes from being a customer and being able to mask transactions while being flexible enough to provide choices in how people pay,” Anderson said.
Vari admits that Rogers is in a unique position as a facilities-based wireless operator. He said that in the last few months it has succeeded in creating a unified company. “We are focused on having four, five, maybe six products that cross the boundaries of the access networks we provide,” he said. “Cable has always focused on the household and the pipe going into it, whereas wireless has always focused on the handheld device and the person attached to it.”