Will Customers Pay for Two High Speed Networks--on Different Platforms--to Support Dual Routers?

If you have lemons, make lemonade, an old adage suggests.

For a high speed access provider with access to both cable TV hybrid fiber coax and wholesale fiber-to-home access, that might mean trying to add value to an offer by bundling access to both networks as part of a single high speed access subscription.

It’s unusual, but few service provider anywhere in the world have such access as does StarHub in Singapore.

So Starhub now is testing the notion that having two high speed connections, supplied by different networks, has value for Wi-Fi coverage, and therefore makes the Starhub “two connections” offer distinct in the Singapore high speed access market.

Essentially, StarHub is trying to wring more value out of a legacy HFC access network, now that it also has wholesale access to the fiber-to-home network in Singapore. Bandwidth really isn’t the angle.

It easily can be argued that there is actually little advantage gained  when a StarHub subscriber buys a S$69 per month gigabit access service sourced by the Next Generation Network Broadband Network used by all high speed access providers in Singapore, and then also gets, at no extra charge, a 100 Mbps connection to the StarHub HFC network.

Competitors offer the gigabit connection for S$49 a month.

In truth, few, if any applications actually use much of a gigabit connection, so adding another 100 Mbps might provide little if any value, in terms of the access connection’s bandwidth. And the additional cost will be a barrier.

But StarHub already has built the HFC network, and now it essentially is a stranded asset. So StarHub might as well try and figure out a way to wring some value out of the legacy asset.

In what might otherwise be an obvious case of overkill (over-provisioning or over-investment), StarHub argues the value is multiple Wi-Fi base stations, to improve indoor coverage.

It remains to be seen whether that “advantage” actually resonates with customers. But it is an unusual offer.

To be sure, StarHub sells linear video entertainment, so the HFC network investment is not fully stranded. But the NBNBN also now means StarHub has to offer gigabit services over the Singapore wholesale network, to remain competitive in the high speed access business.

That means the financial return from the HFC network will be driven primarily by sale of voice and linear video services, not a triple play bundle including high speed access. But that’s where the new “dual-network” approach comes in.

Over the long term, it isn’t so clear that it makes sense to maintain the HFC network. In the meantime, StarHub will try to earn a potential S$20 a month in incremental revenue by supplying a “two Wi-Fi routers” approach.

When you have lemons, make lemonade. Then, can you sell enough of it to make the effort worthwhile?
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