Video services

TelcoTV 2010: Occam VP Warns of the Rule of 18

LAS VEGAS -- TelcoTV 2010 -- TV subscriptions are in danger of falling victim to the rule of 18 percent -- meaning that only 18 percent will hold on to their monthly package over the next 10 years. Russ Sharer, VP of marketing for Occam Networks Inc. (Nasdaq: OCNW) presented this theory at a TelcoTV keynote address last night. He said 18 percent is significant because when it comes to life's biggest questions, no matter what the truth is, 18 percent of the audience won't believe it.

He cited that 18 percent of Americans believe Bigfoot will be caught, another 18 percent see no reason to use the Internet and, by 2020, less than 18 percent of Americans will have a landline voice service in their home. Cable is headed in that direction, he said.

"Who else can survive offering 223 of something, in this case channels, when most only use 12?" Sharer asked.

To help IPTV providers avoid cable's fate, Sharer says the key is a compelling user experience with more personalized channels; more personification through having several viewing options on one screen, like in NFL's Sunday Ticket Program; and more screens -- including mobile phones and tablets -- to choose from. (See Startup Builds TV Widgets for NSN and TelcoTV's Smaller Screen.)

(And, according to a Heavy Reading survey, consumers will indeed pay to get TV on mobile devices. See TelcoTV 2010: Pay TV Shows Multi-Screen Appeal.) Sharer also detailed the areas where he thinks telcos should focus to prep for 2020:

  • Culture: Rural telcos have been consistently commended at TelcoTV for their close ties to their customer base. In a separate panel, Dallas Cox, general manager of Utah-based IPTV provider Manti Telephone, said this is, by far, his company's biggest strength.

    Even so, Sharer said IPTV providers need to get even closer to their customers, to better identify their needs buying habits. Rural telcos are well positioned in that they are close to their customers, can build incrementally for things like long distance, and have the ability to move quickly with technology. But Sharer called on them to also adopt a "beta mindset," embracing risk and potentially failure, and to be a catalyst for community evolution.

    "Like the interstate, broadband picks what communities thrive and which ones wither away," he said. "There will be winners and losers. The companies that succeed are those that adapt."

  • Content: Become much more aware of the end-user device, Sharer advised. Mobile, shared experiments, and on-demand content are what consumers want. The right content should be easy to find and the ease of finding it should be repeatable.

  • Network: With average global broadband speed set to quadruple by 2014, IPTV providers will need 1 Gbit/s by 2015, he said, to be ready for the level of broadband consumption end-user devices, including 3DTVs, will demand.

"If we believe and we see these trends... the question is, when will the winner start?" Sharer asked. "Add plans to make your organization adaptable, think about content, and have a network that's capable of delivering it by 2020."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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