Quadruple Play Will Further Blur Distinctions Between Industry Segments

The distinctiveness of "telco" and "cable TV" industries has been eroding for more than a decade, as many cable companies now sell voice, mobile phone service, Internet access and video, to both business and consumer customers. 

And many telcos sell the same set of services, also to consumers and businesses. Further blurring will happen as the standard consumer offer extends from the "triple play" to the "quadruple play."

The U.S. telecom industry, for example, is more complicated than it used to be, including video entertainment revenues and, by extension, revenues of the formerly-distinct U.S. cable TV industry. The U.S telecom industry now generates about $378 billion in annual revenue.

Excluding cable TV industry revenues, legacy telcos probably generate something closer to $300 billion annually. Mobile is driving legacy telco revenue growth, to be sure.

In 2014, U.S. mobile data revenues alone will cross the $100 billion mark, indicating that mobile data alone represents about a third of all revenues in the legacy telecom business, according to Chetan Sharma.

But it is getting harder all the time to separate cable TV, mobile and the rest of fixed network telecom.

Vivendi has decided to exclusively negotiate for three weeks with cable group Numericable about a sale of a majority of SFR, the second-biggest cable operator in France, to Numericable.

Do mobile operators need cable TV network assets more than cable TV operators need mobile assets? It is hard to say. As the triple-play offer (voice, video and Internet access) has been the mainstay of retail offers in many markets, it now appears the quadruple play (mobile, voice, video and Internet access) is about to emerge as the new standard offer.

If that is the case, a meaningful distinction between cable and telco market segments is going to blur, then disappear.

Separately Vodadone is nearing a purchase of Ono, the largest cable TV operator in Spain, and Vodafone earlier had purchased Kabel Deutschland, the largest German cable TV company.

Liberty Global, on the other hand,l plans to create a pan-European mobile virtural network operator operation, beginning in the Netherlands, Belgium, Switzerland, Austria and the United Kingdom, something Liberty Global has been working on for a year or more.

Liberty Global has preferred an asset light mobile strategy in Europe since at least 2013, when Liberty signed wholesale capacity agreements with Telefonica 02, Orange, Vodafone and Mobistar.

Virgin Media, now owned by Liberty Global, also has had a mobile virtual network operator business in the United Kingdom.

To be sure, most larger service providers in Europe are likely to embark on new acquisition moves over the next several years, to gain scale. In that sense, all assets will be in play--fixed and mobile, cable and telco.

The objective will be to create larger entities, with better economies of scale and scope. The scale will come from amassing larger subscriber bases. The scope will come from acquiring the ability to sell all services to all customer segments.

In the consumer markets, the quadruple play will rule. In the commercial markets, the emphasis will include traditional business communications, but also positioning for emerging Internet of Things and machine-to-machine services.
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