‘The quad play is old hat,’ someone said to us three years ago when we did our first report on Quad Play economics ‘ but even today most triple play operators are fighting shy of going the whole hog and offering four services ‘ mobility, broadband, TV and fixed voice all in one package. That’s because it’s not easy, and until more companies do it, the benefits are hard to fully articulate or prove.
Sometimes we call it the double, triple play because it’s three services ‘ voice, internet and TV on fixed lines then the same three services all over again on mobile lines. The Quintuple play would of course add the dimension of Apps and if these were on both the mobile and on PC and TV platforms, it might be thought of as the double, quadruple play ‘ all four on both fixed and mobile platforms, from one operator in one package.
While here at Faultline we are no longer quite so enamored of even the triple play ‘ because Over The Top content will create video service economics which do not require network ownership or cost ‘ the ability for any operator which previously did not have mobility to add it, remains a core goal for most triple play network owners.
Which brings us neatly to the 40 MHz of cellular 2.6 GHz spectrum acquired jointly by Netherlands cable companies UPC and Ziggo, with between then some 6.6 million (out of a total of 7.2 million) homes connected to cable TV networks.
You would think that the companies were enemies, fighting to take customers from one another, but in fact, given that the Netherlands cable market was regionalized, these are simply two parallel cable suppliers. Which is why it made sense for them to bid together for the spectrum licenses and these now take their place against established cellular suppliers KPN, Vodafone Netherlands and T-Mobile who also picked up extra licenses in the auction.
But like Orange is in France, KPN is a direct competitor in the pay TV market (and the free to air broadcast market) against both Ziggo and UPC, so this is what the pair are aiming at as they begin the slow process of first building a network and then integrating it into their existing triple plays as a survival strategy against a powerful incumbent.
They have two years until they have to put their first systems in the ground and say they are currently looking into what technology they should use. Well that’s a no-brainer given that LTE will surround them all across Europe and devices for LTE will be in abundance in two years, it’s unlikely they will opt for WiMAX, 3G or GSM, but they might. There isn’t a paired spectrum version of WiMAX anyway, so given that these are all paired spectrum licenses, it makes little sense to opt to WiMAX.
Another winner in the auctions was Tele2, itself established as a triple play provider although in most of its markets it is only active in Broadband, fixed telephony and mobile. Tele2 markets stretch from Sweden and other parts of Scandinavia through Western Europe, where it has sold off most of its assets, in order to buy assets in Central Europe and the Baltics. It does have cable TV in about three countries, but not, as far as we know in the Netherlands where it has only 261,000 broadband lines, although it has a ready made match of cellular customers because it currently has an MVNO. You would have thought that there would be very little direct competition between Tele2 and the combination of Ziggo and UPC, and they might just as easily have gone the cellular route together rather than separately.
So suddenly yet another European country makes a quad play push, albeit unlikely to emerge as a package until at least 2 years and possibly longer. But this is very similar to the Virgin Media effort in the UK, which has an MVNO on T-Mobile, merged into NTL, the single surviving national cable TV supplier there. It brought out a quad play in 2006 at £40 a month (around $60). France Telecom last week said that it would bring out a full quad play package by the end of this year.
There are previous other quad play offerings in Europe, and the granddaddy of them all was at Hong Kong’s PCCW, where it is still successful and at Roger’s Wireless in Canada. It was only recently that AT&T in the US felt it could begin offering all four services in one package.
The problems with quad play are that most operators are conglomerations of different billing systems, and that integrating the data from such systems can take 3 to 4 years. Ziggo and UPC should have less of a problem because they have no mobile customers to start with and no legacy mobile billing system ‘ but it will still take all of the two years that it takes to build the first parts of their network to extended their existing billing systems to accommodate mobile style pay as you go and contract deals and complex package options.
This will also lead to an intensification of mobile competition in the Netherlands, with 5 separate suppliers, though with only two of them capable of full quad play offerings (KPN being the other).