Low revenue opportunities and the high investments needed for broadband triple play could result in significant losses for Western Europe’s incumbent telecom operators, according to a new Forrester Research report.
Several operators have already started to offer IPTV with their voice and data services; however, the Forrester study, “Incumbents’ Triple-Play Profitability Crunch,” shows the odds are stacked against telco success with TV services.
Forrester’s new, detailed bottom-up profit and loss model looks at the profit potential from 15 main revenue categories across 17 countries and shows that the vendor-recommended solution would be financial suicide. The model — which uncovers very different cost and revenue projections for each country — predicts an average cumulative per-subscriber loss of $4674 in year 10.
Incumbents in the UK, France, Italy, and Spain face the worst situation, while Deutsche Telekom (DT) faces the smallest loss. Given this very negative business case, Forrester advises telcos to see TV services as purely defensive and forget about any potential revenue and profit uplift.
According to Forrester, incumbents will struggle with triple play for several reasons. Few are strategically committed to triple play. Most lack a track record in innovation, especially outside their core business, and are not operationally and culturally prepared. Additionally, telcos are taking a huge gamble that consumers will quickly change their TV viewing behavior.
For more information, visit www.forrester.com.