What Happens to "Triple Play" Strategy when Voice and Linear Video Both Have Dwinded?

As foundational as the “triple play” bundle of voice, linear video entertainment and high speed access now is in the U.S. consumer telecom services market, it is bound to change as over the top subscriptions gain traction.

If that seems an unremarkable statement, consider that AT&T CEO Randall Stephenson--presently working to acquire DirecTV--also says says it is “inevitable” that the traditional bundle of cable television channels will crumble as more content travels “over the top.”

“Crumble,” he said. So what about DirecTV, the sort of operation that will be negatively affected by the shift?

AT&T is fully prepared for erosion of the DirecTV customer base over time, as over the top streaming becomes a bigger market reality.

Verizon, for its part, has been more circumspect about linear video in recent years, arguing that the company doesn’t actually make much money from linear video subscriptions, and actually has more confidence in eventual over the top solutions.

The apparent differences in video strategy on the part of AT&T and Verizon might be less than they appear. It is a matter of timing only in part. Probably equally significant is that AT&T has a larger fixed network geographic footprint than does Verizon.

Linear video really is a scale business, and AT&T would benefit more than Verizon does from a successful linear video adoption rates by its customers. In the past, smallish numbers of video-capable households have been an issue for AT&T and Verizon.

For both firms, as for cable TV operators, the issue is the timing of the shift.

At the moment, many would argue that the “essential bundle” is high speed access plus linear video. How that might change in the future, when streaming video is the replacement product for linear subscription TV, is the issue.

But the timing matters. AT&T is betting that owning DirecTV will provide value long enough to justify the acquisition.

Still, if “channels crumble,” does the linear video business model also crumble? Even as it hopes to invest billions in linear video, AT&T also is saying the business eventually will diminish. So what happens to the triple play?