Quad Play in Ireland - understanding lock-in [updated]

I came across this really interesting site only recently covering Irish Telecoms (the name is obvious to say the least - I'm not sure how I ever missed it in searches). Recently, there was a great post covering the topic of quad-play and it gave a good description of the rough overall view, and the potential players who are coming from different positions: tv (UPC and Sky), fixed-line (Eircom) and mobile (Vodafone). It gave a good simple insight into all their strengths and their unknowns.

Access to communication through all means - Smartphone and Tablet trends

As Ireland is expected to be the third most ‘digitally engaged’ country by 2015, with examples such as a rise in smartphone penetration from 36% in 2012 to 53% in 2013. This interestingly doesn't put us far behind the numbers for the USA - I'd suspect the graph below is roughly comparable for Ireland in the overall trend (if not in the ratios of handset makers):

Smartphone penetration in the US according to Asymco.com. Puts Ireland roughly in line with these trends. I wonder does it match up all along?

Ireland is also very strong for tablets with 15% penetration in 2013 - well above the worldwide average of 5%. What this means is that Irish consumers are very keen on the use of different means of accessing the internet, and through different mediums (mobile, fixed-line, tv). According to Eircom, 'media stacking' - "engaging with multiple digital devices, was common among 16-24 year-olds. Almost three-quarters (74%) in this group said they often post online or tweet on a different topic while watching TV; amongst the wider population, one third do this."

Should the Operator need to offer to all the different access and media types?

For operators, this means it is well worth considering the financial benefits and implications of providing, or not providing, multiple offerings. Vodafone are acknowledged to have this as their goal in the post that prompted my own writings. It must be seriously considered whether customers will be willing to commit to one user if it gives them the incentive of an easy-to-understand single bill. Additional perks such as roaming deals (offered through international affiliates) can be huge potential factors for customer retention.

Quad-play and a comparison to Apple

I also noticed an angle that was only touched on slightly at the end.

"And is this a good thing?  Well, yes and no. Yes, because it will become easier to buy all these products from one supplier, which may help simplify our lives – and there are discounts to attract us to these bundled offers. And no, because if quad-play becomes the norm, there will in effect be fewer vendors offering the suites of products that customers expect.  The new concept of ‘service portability’ (discussed at length at a recent conference) threatens to reduce barriers to switching your quad-play offering to another supplier – but honestly, it’s hard to see it succeed in Ireland.  Let’s see."

From a business perspective, I'd suggest has to be the only goal of these triple-play and quad-play operators. Pure and simple incentives to stay with their offering over the next. At one point in time, it was easy as a mobile operator to sell yourself on providing the best network coverage in Ireland, but as this has been less and less of an issue (in the major urban areas at least). Now, as speeds reach a point where it is getting harder and harder to see the difference. As '4G' goes live and comparisons such as this (from a personal friend) appear....

"I just uploaded a 300MB video to YouTube and it took 4 minutes using the newly available 4G connection through my iPhone. If I was to use my eircom "broadband", the same file would have taken me 2 hours and 20 minutes to upload..."

.....operators are going to have to compete on various other solutions and the ability to provide a range of services and incentives by buying all from the one place will become more and more relevant.

Apple's own approach is this when it comes to their own hardware. Provide beneficial solutions to you so that you want to continue to expand your range of devices from them and only them. Examples of this are:

• Airplay support from any device (laptop or smartphone/tablet) to an Apple TV.
• Remote control of an Apple TV by an app on your mobile device
• Seamless backups provided by a Time Capsule to your laptop or desktop Mac.
• Apps only working on their devices (as specific as the iWork suite, and as varied as purchasing apps through the App Store and thus reducing the inclination to swap to a competing system).
• Easy synchronisation of your preferences and apps across all devices.
• etc

Apple is well aware that in time a threat will always be there that the quality of mobile devices manufactured by the other competitors will rise enough in standard to compete against Apple's own manufacturing. In providing additional tie-in, they are incentivising you to stay on their hardware.

Eircom has just such a system in place with their wireless hotspots. At one point in time, so long as you were an Eircom customer, you had free access to wifi in McDonald's. They have since offered a service where it was possible for a customer premise that was interested in offering free wifi to customers to receive a free internet connection solely for customers so long as they had an Eircom account. [Of course, for me personally, not being an Eircom customer this was terrible and I'm personally glad this hasn't taken hold :)]. Perhaps in time, all of the potential quad-play operators will be doing the same: Vodafone utilizing their European spread and offering free roaming to their customers while on their networks, one of the operators offering access to a movie rental service through any device at any location so long as you have an account with them, etc.

 

Portability Issues

As acknowledged by the original author the target of portability (or lack of it) between services has been highlighted at conferences and elsewhere. Taking my own lock-in, as someone who bought into the perks of Apple hardware integration and is now at present unwilling to move to another platform until I see another one that provides the same level of integration, perhaps it should be looked as a healthy form of competition (while I'm writing this on a Macbook and my second screen is provided by an Apple TV, I'm always keeping an eye on other systems, e.g. Windows, to see if they're providing a better solution that I should consider long-term).

Will the operators try to out-do each other by providing better integration and offerings to incentivise customers to move? In the USA, where only a limited number of telecom operators exist and there is limited competition between them (unless occasional threats appear such as Google's Fiber offerings), perhaps it's a valid concern. But as evidenced by the unbundling of electricity operators in Ireland and very slow movement of customers to other companies (even if it means a better savings), perhaps it's largely apathy that affects customers anyway. The race is on for the quad-play operators to win the hearts and minds of the customers. Interesting times ahead!

[Update 9th April 23:00]: Taken from Benedict Evans:

"The big problem that these products pose to MNOs, it seems to me, is not actually the threat to SMS revenue. Rather, it’s the threat to identity. We do already have number portability, but changing your number remains a major frictional issue reducing churn. But if your contact point moves to FB Messenger or some yet-to-be-founded app that explodes in the next few years, then the SIM you have in your phone today doesn’t matter at all, and you could swap it in and out from week to week depending on which mobile operator was offering the best deal - a great recipe for truly murderous price wars. For a really killer effect, of course, you’d have to combine that with an end to the subsidy + contract model, which is far from certain (and would also be terrible for Apple and Samsung). But that’s the threat."