Strategy Analytics: Broadband Operator Profits Threatened by Price Cutting
Strategy Analytics: Broadband Operator Profits Threatened by Price Cutting
Tariff Cuts Need Precise Targets
Boston, MA - October 20, 2009 – Broadband operators stand to lose revenues and profits, unless they precisely target new tariff and service bundles by market segment. Research from the new Strategy Analytics Tariff & Revenue Strategies Service (TRS) warns service providers to be wary of commodity pricing as competition heats up.
Based on surveys of over a thousand US Internet households, and combined with a ‘virtual shopping experience,’ Strategy Analytics has identified three distinct purchasing segments, along with their market share, all based on responses to prices, features and combinations of digital voice, data and video service bundles:
• 1. Multiplay Adopters - 62% - with both broadband and subscription TV services. Most have mobile services.
• 2. Non-TV -18% - with broadband Internet service and often mobile, but no subscription TV
• 3. Traditional Users - 20% –with narrowband fixed-lines and strong relationship with the phone company,
Harvey Cohen, President of Strategy Analytics, notes, “As the broadband market matures and competition accelerates, service providers have been tempted to compete for share by offering broad price cuts. While over 80% of households surveyed already have some form of broadband, only 30% would consider switching service providers for any reason. Thus operators need to be wary of price cuts that churn their customer base and erode margins for no gain.”
This Strategy Analytics Tariff and Revenue Strategies (TRS) service analysis, “Profitable Tariff Strategies for Bundling US Consumer Digital Services,” is designed to assist broadband operators who wish to increase profitability. ”Over the next decade, operators must protect ROI by targeting highly differentiated service fees by market segment,” added Sue Rudd, Director TRS. “The TRS survey-based simulation tools and financial models are designed to help wireline, wireless and cable operators evaluate the business and financial impact of ‘optimal’ tariffs in each segment.”
About Strategy Analytics
Strategy Analytics, Inc offers high frequency market intelligence on multimedia, fixed and mobile communications. In August 2008, Strategy Analytics acquired Teligen a provider of telecommunications pricing and tariff information. See: www.strategyanalytics.com
US Contact: Sue Rudd, +1 617 614 0709, SRudd@strategyanalytics.com
European Contact: Sylvia McCafferty, +44(0) (1908) 423 601, SMcCafferty@strategyanalytics.com
