Imagine a bank which offered only two services to people: took their money as deposits and paid an interest for it; and offering this money as loan to businesses for a higher interest, making profits from the difference between the two. Banking would be a cottage industry that no one would talk about, whose difficulties would not impress any government and the bankers would have no power in society.
However, the fundamental service of banks: taking deposits and giving loans, is so basic that no banks today offer just that. Yet, every service of banking is a disguised version of this aspect: giving or taking money, at interest. Today, banks offer loads of services and products to customers revolving around the same tenets.
Broadband industry is like early banking, all about investing in fiber or wireless infrastructure, connecting homes, office, people and devices to high speed internet, and yet, despite constantly upgrading the value offered to customers, earning lesser and lesser.
Broadband has its own commodification mindset to blame for its ailments; which include large capital investment, high finance cost and interest pressures on the one hand, and a fiercely competitive marketplace, where each broadband player seeks to expand the subscriber base, predominantly through better service offerings, read higher speed and more data, at a lower cost.
Juxtapose the analogy of banking with the situation of broadband industry today. If banks had continued to offer only a single saving deposit scheme and one-class business loan, and then started to compete for depositors offering higher interest and sold their loans to businesses at lesser interest, the banks would have been in a gut centuries ago and never become as powerful.
Instead, they launched a series of products, services, concepts, and drilled it down into us all till it became a reality. Saving deposit, current account, pensioner’s account, salary account, corporate account, fixed deposit and recurring deposits are just some of the ways in which banking takes our money. Corporate loans, gold loans, land loans, home loans, vehicle loans, start-up loans, stock market loans, and credit cards, are some of the numerous ways in which it earns our business on the other side.
Replace the word money with internet or connectivity, banking with broadband industry and we will have a whole new insight on the creation of a whole new world order. The first, almost a mandate, is to move from offering pure play broadband services to doing double or triple play. It is extremely easy for broadband players to offer TV, VoIP, IPTV, Video-on-Demand, among others. These firms also need to adopt broadband billing solution to make their repeated customers happy.
The most critical foundation in both mindset and infrastructure of broadband players is to enhance the quality of CRM. There must be enough data points to know your subscribers inside-out and provide enough insight into their pattern of consumption of connectivity. These will provide lot of insight into their usage patterns, times, protocols, content schema, etc. The focus must move from having an elementary, functional database about customers to having enough data to understand them very well.
Chase the highest RPUs segment and never lose them. Cut-off the lowest segment through ruthless levels of policy management and productized offering, or even transfer them to the competition. Plan a marketing, pricing and customer service matching the requirements of each of the segments.
Besides metered billing and an evolved CRM, a highly capable Broadband Policy Management Suite will help you match your new focus and marketing plans with the existing infrastructure.
Finally, build a strong Value-Added-Service suite for the subscribers based on their value band. For example, most Broadband players can immediately look at e-learning, e-medicine, VOIP, video on demand, e-gaming, shopping, classifieds and listings, among others to people. The VAS must strongly match the customer segmentation and their needs.
Some of these can be offered at no-cost initially for the users, but bills them for further usage, in a classic early-free, bill-after-habit-formation model.
Broadband must replicate banking wisdom by:
- Understand customers, their habits, needs and patterns of connectivity usage
- Cultivate and groom subscribers in layers, classifying them as platinum, gold, silver and plastic
- Prepare them to set a demand-supply price rationale
- Offer more: Double and Triple play are a must today
- Think of smart products for the highest customer segments, reward higher RPU users
- IPTV, VoIP, Video-on-Demand are easy offerings to add to your menu
- Go VAS on broadband, to ensure the commodity image of connectivity is shattered
- Forget cost discounting and price wars: build value in offerings
In subsequent articles, I will discuss the issue of how to launch and operate VAS and the intricacies of understanding patterns of traffic usage and creation of customer segments. The good thing to sign off is pleasant word of hope: Broadband can become a stronger, richer and more profitable industry.
Anil Thota is a consultant with SURE! (a Magnaquest product), SURE!is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.