Pay TV operators are already facing rising costs driven by deployments of OTT and hybrid services reaching multiple platforms, and these will escalate further over the next few years. This will come as little surprise, but operators may be shocked by the prediction from broadcast services group S3 based in Dublin, Ireland, that support costs to the global pay TV industry will triple from €2 billion ($3 billion) in 2011 to €6 billion in 2014. This is excluding the upfront capital costs, including hardware, of installing services, but including all follow up costs such as taking call centre calls, replacing fault STBs, and even supporting help based websites. Such costs were easier to contain when the operator owned the whole end-to-end delivery chain, but are escalating now that customers may be receiving content on tablet devices, PCs and smart phones, via unmanaged delivery platforms, from sources such as YouTube that themselves are highly variable in quality. But even within walled garden pay TV services, costs have been rising partly because of deficiencies spanning various parts of the quality assurance process from product testing at the engineering stage to field maintenance by the operator. According to S3, about 40 percent of STBs that are returned for repair turn out not to be faulty, representing a huge unnecessary cost to operators as well as a cause of customer dissatisfaction and churn.
This reflects inadequate test and measurement procedures and tools, coupled with lack of remote monitoring capability that could identify accurately the status of a STB without requiring an onsite visit. But there is also scope for improving the reliability of STBs through better testing before shipment.
For operators the objective is to reduce the cost of support at all levels while minimising aggravation to customers. Until now this circle has often not been squared adequately, either cutting costs at the expensive of excessive customer dissatisfaction, or spending too much on truck rolls in the hope of minimising churn. Neither of these strategies can succeed in a competitive marketplace, so operators need to balance customer satisfaction and support.
Given that in the real world there will always be equipment and service failures, operators need to optimise a three-pronged approach including online help, telephone support and onsite visits. These impose very different costs, with Web support working out on average about 65 Euro cents per incident, telephone support calls about €5, and site visits about €100 Euros, according to S3. Given these huge disparities, operators want to ensure as many problems as possible can be resolved via the Web, and should be prepared to invest more in online support given the huge cost savings that can be achieved through a relative modest reduction in call centre traffic and above all site visits. On the other hand, when site visits are required, they should be based on accurate information about the fault so that they can be completed as quickly as possible.
Operators also need to consider how they will handle connected home and OTT deployments, which in both cases often serve devices other than TVs over connections they may not manage directly. This will involve extensive customer education according to S3, since operators will not be able to support all devices that a consumer may chose to access content from. New realistic levels of expectation have to be created or else operators risk being damned whatever they do. If they fail to keep pace with competitors they will lose customers but if they extend services to devices that then cause quality problems, churn could also result.
To a large extent though it is up to the quality assurance (QA) industry itself to solve the problems of managing TV Anywhere services, since this inevitably involves cooperation between different parties given that no one vendor has a test and monitoring system that embraces all platforms or applications. This is causing some vendors to bury their differences and start working together. S3 says it is collaborating now with major vendors such as IBM and Hewlett Packard that were traditional competitors in its IT markets. This at least though is persuading some operators such as Italian commercial broadcaster Mediaset to adopt S3 technology for multiplatform testing. Mediaset has chosen S3's StormTest Development Center as its multiplatform test automation system to validate that the components in its content delivery platform, including STBs, are ready for deployment. Mediaset will also be testing Web-connected TVs, PCs, mobile phones and tablets for its recently launched OTT service.
This raises the question of whether and how much operators such as Mediaset will be able to curtail their support costs by deploying such automated testing technology. The view of S3's Director of TV Technology, John Maguire, without any reference to Mediaset specifically, is that operators support costs will rise significantly whatever they do, but that for the industry as a whole the increase could be kept to a doubling rather than trebling in costs over the next three years if they address the support issue and deploy the best tools available. This would mean the industry spends €4 billion rather than €6 billion in support during 2014, a significant saving but still a great cost. There may be additional benefits in customer satisfaction but the impact of those would tend to cancel out if all operators took the appropriate medicine. The support cost savings on the other hand are there for the taking.