Capturing Telecom Market Share: Cable Companies Play to Win

Transcription

1 Capturing Telecom Market Share: Cable Companies Play to Win New Paradigm Resources Group, Inc. 30 S. Michigan, Suite 700 Chicago, IL (312) New Paradigm Changing Resources Landscape Group, Inc. May 28, 2008

2 The Agenda 1 Cable Sector at a Glance Service Tactics: Cable s Evolving Portfolio Customer Level Tactics: Segmentation & Targeting Sales Tactics: Front Line Sales & Promotion Pricing Tactics: Market Level Structures Looking Ahead: Our Near Outlook New Paradigm Resources Group, Inc. 2

3 Cable Sector at a Glance Section 1: Setting the Stage: The Cable Sector at a Glance New Paradigm Resources Group, Inc. 3

4 Cable Sector at a Glance Cable s Historical Development Community access television origins Predominantly residential networks Revenue models and product development based on programming and content Video services dominate for now Key Take- Away: Cable companies are still largely videocentric in their product development and marketing New Paradigm Resources Group, Inc. 4

5 Cable Sector at a Glance Cable s Network Presence Fiber networks and nodes clustered primarily in residential and suburban markets Few active build outs into the central business districts although this is changing Service bundles based on residential models designed to meet those customer needs Key Take-Away: Cable companies are quickly shifting focus from residential/suburban to business/semi-urban New Paradigm Resources Group, Inc. 5

6 Cable Sector at a Glance Key Trends Shaping the Cable Sector Everything digital shift to all IP-based networks and services Continued bundling of converged services (video, data, voice) Increased activity in the commercial market especially in the small/medium business (SMB) segment Key Take-Away: Cable companies are shifting away from historical video focus and towards a big data pipe strategy New Paradigm Resources Group, Inc. 6

7 Cable s Service Portfolio Section 2: Service Tactics: Cable s Evolving Portfolio New Paradigm Resources Group, Inc. 7

8 Cable s Service Portfolio Residential Product Options Key Differentiators Video Data Voice Analog Cable TV Digital Cable TV DSL-Level Cable Broadband T-1- Level Cable Broadband Residential Cable VoIP Core competency of MSOs Readily available Emphasis on programming and content options Higher bandwidth levels for lower monthly rates Bundled discounts Quicker installation Digital quality sound Unlimited local calling, LD Enhanced calling features Simple billing structure New Paradigm Resources Group, Inc. 8

9 Cable s Service Portfolio New Paradigm Resources Group, Inc. 9

10 Cable s Service Portfolio New Paradigm Resources Group, Inc. 10

11 Cable s Service Portfolio Commercial Product Options Key Differentiators Data DSL-Level Cable Broadband T-1- Level Cable Broadband Fiber-Based Data Transport Higher bandwidth levels for lower monthly rates Bundled discounts Fewer subscribers per node for business customers 24/7 business-grade customer service Quicker installation Viable fiber-based transport alternative Voice Business Cable VoIP Digital quality sound Unlimited local calling, LD Enhanced calling features Simple billing structure 24/7 business-grade customer service New Paradigm Resources Group, Inc. 11

12 Cable s Service Portfolio New Paradigm Resources Group, Inc. 12

13 Cable s Service Portfolio New Paradigm Resources Group, Inc. 13

14 Customer Segmentation & Targeting Section 3: Customer Level Tactics: Segmentation & Targeting New Paradigm Resources Group, Inc. 14

15 Customer Segmentation & Targeting Residential Targeting Primary Secondary Ancillary Video Digital obasic opremium Analog obasic oexpanded Basic opremium Broadband Internet DSL-level bandwidth T-1-level bandwidth Voice Cable VoIP Key Take-Away: Bundling strategy of digital products; Video is still the lead focus, but bandwidth catching up New Paradigm Resources Group, Inc. 15

16 Customer Segmentation & Targeting New Paradigm Resources Group, Inc. 16

17 Customer Segmentation & Targeting New Paradigm Resources Group, Inc. 17

18 Customer Segmentation & Targeting Commercial Targeting SOHO/Telecommuter Primary Secondary Ancillary Broadband Internet DSL-level bandwidth T-1-level bandwidth Business-grade product Business-grade customer service Voice Cable VoIP Remote access Business-grade product Business-grade customer service Video Digital TV obasic opremium Key Take-Away: Beachhead segment; Data bundled with VoIP is the lead product focus; Business grade service is the primary differentiator New Paradigm Resources Group, Inc. 18

19 Customer Segmentation & Targeting Commercial Targeting SOHO/Telecommuter Time Warner Cable offers a Home Business Solutions Internet package with cable modem speeds of up to 7 Mbps X 1 Mbps at price points 50% less than the Company s identical SMB offerings. Cox offers Telecommuter Internet packages at price points 25% less than the Company s identical SMB product. Comcast introduced business VoIP to residential customers wishing to telecommute. No requirement that the customer premises be zoned for commercial use. New Paradigm Resources Group, Inc. 19

20 Customer Segmentation & Targeting Commercial Targeting SMB Primary Secondary Ancillary Broadband Internet DSL-level bandwidth T-1-level bandwidth Business-grade product Business-grade customer service Voice Cable VoIP Remote access Business-grade product Business-grade customer service Video Digital Cable TV obasic opremium oprivate view opublic view IPTV pilot programs Key Take-Away: T-1 equivalent data bundled with 4+ voice lines is the lead product focus; Business grade service is the primary differentiator with video in specific verticals New Paradigm Resources Group, Inc. 20

21 Customer Segmentation & Targeting Commercial Targeting SMB Cox is presenting its 12 Mbps x 1.5 Mbps cable broadband Internet service as a T-1 equivalent to its business customers. Comcast is offering up to 8 business VoIP lines in several of its markets. The Company expects to increase this availability further by Q Time Warner Cable is offering its BusinessLink.tv service to commercial customers. This is essentially an IPTV product that can be provisioned over a cable modem or Ethernet infrastructure and provides up to 100 channels of digital video directly to the PCs of company employees. New Paradigm Resources Group, Inc. 21

22 Customer Segmentation & Targeting New Paradigm Resources Group, Inc. 22

23 Customer Segmentation & Targeting Commercial Targeting Large Enterprise Primary Secondary Ancillary Broadband Internet T-1-level bandwidth Fiber-Based Data Transport Metro Ethernet Dedicated Private Line Wireless backhaul Competitive SLAs Voice Application-specific Video Application-specific Key Take-Away: Emerging Ethernet based product focus, but still being defined; Wireless backhaul in the works; Network diversity is the primary differentiator New Paradigm Resources Group, Inc. 23

24 Customer Segmentation & Targeting Commercial Targeting Large Enterprise Time Warner Cable offers dedicated metro Ethernet services as well as point-to-point Ethernet-over-fiber in several major metro markets. Bandwidth typically starts at 5 Mbps and can go up to 1 Gbps. Cox offers dedicated Ethernet access as well as wholesale point-to-point Ethernet transport in numerous metro areas as well. Cox maintains that it can typically price its services 10% less than the incumbent. Charter offers fiber-based point-to-point Ethernet transport in most of its service areas. New Paradigm Resources Group, Inc. 24

25 Front Line Sales & Promotion Section 5: Sales Tactics: Front Line Sales & Promotions New Paradigm Resources Group, Inc. 25

26 Front Line Sales & Promotion Residential Primary Secondary Ancillary Media advertising Television ads Radio ads Print ads Billboards Bus posters Mobile billboards Online banner ads Online promotions Social media Direct Marketing Direct mail postcards Direct mail inserts Direct Selling Inbound sales Call centers MDU events Winback/retention offers Rewards programs Key Take-Away: Advertising-based sales model that emphasizes programming & content; Order taking and up selling after teaser rates expire New Paradigm Resources Group, Inc. 26

27 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 27

28 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 28

29 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 29

30 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 30

31 Front Line Sales & Promotion Commercial Primary Secondary Ancillary Direct Selling Dedicated inbound sales Outbound sales o Inside reps o Outside reps Partnerships Affinity programs Rewards programs Referral programs Winback/retention offers Direct Marketing Direct mail postcards Direct mail inserts Media advertising Television ads Radio ads Print ads Billboards Bus posters Key Take-Away: Heavy feet on the street focus; Longer term lengths with guaranteed pricing New Paradigm Resources Group, Inc. 31

32 Front Line Sales & Promotion Commercial Sales & Promotional Tactics Charter has inside sales reps who are dedicated to selling business bundles with business VoIP as the lead offering Time Warner Cable offers a 20% - 30% discount on high-speed Internet and 10% discount on video services through a number of chamber of commerce affinity programs Comcast offers instant cash credits of up to $100 to business customers for referrals that result in a sale. New Paradigm Resources Group, Inc. 32

33 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 33

34 Front Line Sales & Promotion New Paradigm Resources Group, Inc. 34

35 Pricing Tactics Section 6: Pricing Tactics: Market Level Structures New Paradigm Resources Group, Inc. 35

36 Pricing Tactics Residential Bundles Entry-Level Lead Offer Comparison Company Bundled Price (MRC) Unbundled Price (MRC) Comcast $99.00 $ Cox $99.00 $ Charter $69.97 $ Time Warner Cable $89.95 $ RCN $75.00 $ Key Take-Away: Standardized bundled pricing across most markets; no (or limited) term lengths; up selling after teaser rates expire New Paradigm Resources Group, Inc. 36

37 Pricing Tactics New Paradigm Resources Group, Inc. 37

38 Pricing Tactics Commercial Bundles Entry-Level Lead Offer Comparison Company Bundled Price (MRC) Unbundled Price (MRC) Comcast $99.00 $ Cox $ $ Charter $ $ Time Warner Cable $ $ RCN $98.00 $ Key Source: Take-Away: NPRG Research Standardized bundles with localized pricing; 2-3 year term lengths with guaranteed monthly rates New Paradigm Resources Group, Inc. 38

39 Pricing Tactics Pricing Promotions Comcast runs Internet promotions where new business customers can get 16 Mbps x 2 Mbps for $ $95.00 MRC. This is a 20% - 30% savings over the normal price and it includes basic cable TV as an instant rebate. Charter offers discounts of 15% for double-play business bundles and 20% for triple-play business bundles in many of its markets. RCN offers stand-alone 10 Mbps x 1 Mbps cable Internet to residential customers for $29.99 MRC on a month-to-month term. New Paradigm Resources Group, Inc. 39

40 NPRG Outlook Section 6: Looking Ahead: Our Outlook New Paradigm Resources Group, Inc. 40

41 NPRG Outlook Product Trends Customer Group Residential Telecommuter/SOHO SMB Large Enterprise Product Focus Digital video, lower-tiered cable broadband, bundled with VoIP (1-2 lines) Higher-tiered cable broadband, bundled business VoIP (1-2 lines), and digital video T-1 or IAS equivalent packages with 6 to 20 voice lines and up to 3.0 Mbps symmetrical cable broadband High-bandwidth Ethernet over fiber products up to 1 Gbps Key Take-Away: Continued focus on digital services with intensified push into the SMB segment New Paradigm Resources Group, Inc. 41

42 NPRG Outlook Inflicting More Pain: The Next SMB Bundle? T-1 comparable data speeds (5 Mbps symmetrical bandwidth with up to 30 Mbps download) 16+ voice lines Business video 7 10 day installation $200 $500 MRC Positioned to compete in the DIA/IAS segment Key Take-Away: Additional voice line capacity and DOCSIS 3.0 bandwidth will make this a high growth area New Paradigm Resources Group, Inc. 42

43 NPRG Outlook IPTV Backlash: Cable Responds First skirmish Verizon vs. Cablevision in New York Broadband boost capabilities 30 Mbps / 5 Mbps Programming/content expansion Newsday purchase Commercial portfolio expansion Voice over Ethernet DOCSIS 3.0 by end of 2008 Key Take-Away: Verizon-Cablevision scenario is an effective case study of what will occur in other markets New Paradigm Resources Group, Inc. 43

44 NPRG Outlook WiMax Strategy: A Wireless Solution for Cable? New WiMax alliance with Sprint/Nextel and Clearwire Not a Pivot program Google and Intel $12 billion venture Video strategy for data rich handsets Next step: Cable video content and programming to wireless customers Key Take-Away: Cable companies are still searching for a viable wireless strategy New Paradigm Resources Group, Inc. 44

45 New Paradigm Resources Group, Inc. Informed direction within a changing landscape Thank You! New Paradigm Resources Group, Inc. 30 S. Michigan, Suite 700 Chicago, IL (312) New Paradigm Resources Group, Inc.