Quad play comes to US (finally) to kill stand-alone mobile

Written by on August 10, 2015 in Guest Blog with 0 Comments

Quad play has finally arrived in the US and it’s here to kill standalone mobile.

Dashing to the Bottom

Cowboy - Wilder WestenThe US mobile market is essentially in a race to the bottom; that’s the net result of an accelerating price war. Most pricing in US mobile revolves around data packages; virtually no post-paid plans charge distinctly for voice or text anymore (though many subscribers are still using old plans that do). In just the past couple of years we’ve seen a greater than order of magnitude decrease in the price per gigabit and the cost continues to drop. Verizon’s latest announcement of a simpler group of small, medium, large and extra large data plans is just more evidence that this race is headed toward less expense and less variety in the interest of simplicity.

The Multi-Play Effect

Pricing aside, the two key themes in US mobile are device payment and quad play. US mobile operators are dropping device subsidies in favor of 3 core payment models – all up front, pay to own in installments and, more recently, device leasing. This moves the industry away from contracts, but toward a model where owning a customer’s ongoing device upgrade lifecycle is a key to long-term retention.

The second story – and probably more important – is the shift to quad play. With news like AT&T completing its acquisition of DirecTV and immediately rolling out a Pay TV + mobile bundle as well as Verizon offering HBO Now over the top of its mobile service, this genie is out of the bottle. It’s not just about getting a better price for data; the game is shifting to who can offer the best combination of fixed and mobile broadband as well as home-based and mobile entertainment content. And this is where not just quad play, but multi-play comes in. Offers like AT&T Digital Life are using mobile and Pay TV platforms to offer and enhance security, energy management and home automation. In that context, mobile data is just another access mechanism for customers to tap into more valuable & stickier lifestyle services.

The intersection of device payments and multi-play means we should not be surprised if along with a mobile device lease or installment plan, streaming devices enter the bundle as well. That just seems inevitable; why wouldn’t a multi-play provider sell you an iPhone and immediately offer a deal on an Apple TV or other streaming device that plays well with iOS. Similarly, it makes sense that an Android device would automatically come with a Chromecast bundled in. And if Microsoft could gain some mobile market share, a smartphone-tablet-Xbox One bundle would be pretty appealing too.

Where Standalone Mobile Dies

This rapid shift to multi-play is why financial analysts are pressing Comcast to snap up T-Mobile USA, which has just moved into 3rd place in US mobile subscriber market share. Comcast, which has a large if not national footprint, would be a formidable player in the multi-play race with a strong mobile footprint; its king-of-the-cable-hill Pay TV, WiFi and fixed broadband assets; and its potent content business (e.g. NBC Universal).

In this larger context, while mobile service is absolutely a critical catalyst, it’s just an access play. And we all know the recent history of access-centric services. This is why it makes sense that multi-play can kill stand-alone mobile offerings. If mobile is just one, increasingly less expensive piece of the overall lifestyle services package, then it doesn’t have all that much value on its own. Its needs to be very well integrated into all of the services in a lifestyle package.

For example – those who subscribe to AT&T Wireless, DirecTV and HBO should expect – or rather insist – that AT&T make HBOGO usage “free” over AT&T mobile broadband. Streaming that content should not count against an AT&T Wireless data plan. And if that becomes the case, there is little to no reason to ditch the lifestyle bundle for a pricing gimmick from another mobile operator who can’t offer the same end-to-end value, even at a seemingly cut rate price for mobile.

Stand-alone mobile will continue to exist in the US. And it will persist for a while because most of the existing subscriber base tends to be confused about how to compare value if it is not simply uninformed and lethargic. But it seems likely that in the high value, post-paid prime subscriber segment, stand-alone mobile just won’t bring enough value to the table to remain interesting or relevant for very much longer.

Mobile standalones: your move.

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Edward Finegold

About the Author

About the Author: Ed Finegold is CSO for Validas, a company that specializes in personalized user experiences that leverage analytics-as-a-service to simplify mobile buying, selling, pricing & billing. Ed has been a regular contributor to BillingViews. .

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