08 FTTC – fiber to the cash: Making fiber
investments pay off
After massive investments in infrastructure, fiber networks have become a reality in many markets. Now operators need an effective commercialization strategy to quickly transform fiber to the curb/home into cash. Launching next-generationhigh-speed networks is a once-in-a-generation transformational change in operators’ technical capability. Unfortunately, many operators fail to convert this into an appropriately exciting pitch to their customers and fall short of realizing potential revenue upside along with adequate return on investment. For companies operating in high-growth markets, fiber represents an opportunity to drivestepchange increase in ARPU and significantly accelerate take-up of broadband and additional services. Revenues from fiber services are not only an attractive target for nimble attackers but can also reverse declining fixedline revenues for entrenched incumbents and drive 20 to 30 percent fixed top-line growth. Given the immense challenges involved in designing and launching a fiber network, telcoscan be forgiven for thinking that the job is virtually complete when they light the fiber. However, the real challenge – transforming top-performing technology into bottom-line value – has just begun. An effective fiber network commercialization approach is needed to accelerate subscriber uptake of new fiber offers, drive penetration of additional services, and quickly build revenues. Criticalsuccess factors include (1) designing a winning fiber value proposition and product portfolio that promotes up-selling – particularly using new TV services; (2) achieving excellence
in a new go-to-market and sales approach that targets attractive neighborhoods through high-touch doorto-door selling; and (3) delivering against the service promise by ensuring that customers face minimal issues fromthe point of ordering through to installation and use in their homes.
Positioning fiber as a revolution
Introducing fiber is a rare opportunity for telecoms operators to delight their customers. To capture the full fiber opportunity, operators need to develop portfolio strategies that lead existing subscribers to upgrade to higher offers (e.g., low speed limited to high speed unlimitedbroadband or from single to multiple services), drive penetration of additional services (primarily IPTV), and attract new subscribers with innovative offers relative to existing market options. Hitting the sweet spot in product design can boost ARPU by 20 to 50 percent and spur strong subscriber acquisition. Offer a lot more for a little more. This is the most effective philosophy to drive up-sell. Itcan take the form of making high-speed products affordable (e.g., 8 to 16 times the speed for a 20 to 40 percent price increase) and offering bundled solutions to meet multiple needs and increase customer value (e.g., double- and triple-play products that combine voice plus Internet, and voice plus Internet plus television, respectively). However, to design these portfolios, it is essential tounderstand not only the impact on the new contribution margin but also the impact on overall product profitability. Case in point: offering additional speed without optimizing cache mirrors and the content delivery net-
Select services appeal to consumers across multiple markets Select services appeal to consumers across multiple markets
Average willingness to pay USD per month 10 9 87 6 5 4 3 2 1 0 0 Niche services Services with future potential School services Computer management High-priority services Video surveillance Key services for the short term
Total home equip. maint. Home management Advanced fixed voice Archive Control Multiplayer games backup point Karaoke Games Picture sharing Lottery Gambling Video sharing Video conference one on one TV shop Multiple video...