Telco’s Advantage with IPTV

16 Jul
Singtel recently announced their ambition to revolutionise the TV experience  and Ericsson backs them up with their commitment to becoming a multi-media company. Australia, has a saturated smartphone market, this and lower mobile call charges is resulting in erosion in Telecommunications company’s profit margin, it is urgent for Australian Telcos to expand their product mix. Extending into becoming a content provider and delivering PayTV or IPTV is a logical step, several Australian Telcos are already offering a TV service. The question remains, however, how can they capitalise on this offering to boost their income sheets while battling against the global rise of content provider giants, companies such as Apple, Google and Amazon.

In the Australian market, Telstra is clearly in the best position to maximize and grow their PayTV business. They have a dominant position, already selling both Foxtel Pay TV and the Telstra T-Box IPTV, while owning a 50% stake in Foxtel with News Corp. Before the introduction of internet streaming TVs, Foxtel was briefly Australia’s only PayTV provider (via Telstra) having purchased Austar in 2011. As the NBN is rolled out across the country and Telstra begins to lose their huge network advantage, Foxtel may be their savior, providing them with a differentiator, still, to other Telcos.  Other Telcos have cottoned on to this and are now disrupting the Telstra/Foxtel monopoly. FetchTV has now partnered with iinet and Optus (as well as other smaller Telcos) to providing IPTV to customers without a Telstra connection.  Packages start from $10 per month ($5 cheaper than Telstra’s T-Box monthly plans).

The main threat to Telcos in this space is content provider giants. Amazon, Apple and Google all offer IPTV, either via a set top box or via a Smart TV. These brands hold a much high promoter score than Australia’s Telcos, and can provide the seamless integration between multiple devices customers have come to expect. Essentially however, while set top boxes, Smart TVs and PayTV are all slightly different, the user receives a product which is very similar: more of the media content they want, when and how they want it.

The question then remains as to who can provide the best service at the lowest price.  Business Spectator’s Harrison Polites argues that Telcos need to focus on their core business: providing access to a high quality, fast and available network.  PayTV providers as well as IPTV ( Smart TVs and set top boxes) all require access to a network.  The cost of this connection is passed on to the consumer.  This could be Telcos key advantage, as we have already seen with Telstra, bundling PayTV and broadband and fixed line allows them to lower prices and increase sales. A pure content provider like Amazon, does not have the same advantage.  So while a customers may be in love with their white (or black) Apple products, purchasing each device and service separately is costing them more, Telcos need to leverage this price differentiator as much as possible to grow their market share.



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