This briefing note is prepared as background information for the Forum at ITU Telecom World 2006. This is part of a series of articles providing an analysis of some of the hot topics in the Programme.

Telcos, cable companies, and broadband internet service providers are providing new and innovative services, in which they increasingly see each other as competitors for the same market. Now, so-called triple play (a combination of data, voice and video, as shown in Figure 1) offerings are available in many developed economies. The OECD reports that triple play is available from 48 different service providers in 23 of its 30 Member States. Furthermore, 10 economies now have "quadruple play" services available (adding mobile communications to the mix). As more services are added, the preferred term is "multiple play".

Figure 1: The Shift to Multiple Play Source: OECD Multiple Play, Pricing and Policy Trends:
OECD Telecommunications and Information Services Policy Working Party.

Evolution: Double-Triple-Quadruple

"Double play" started to emerge in the early to mid-1990s, when dial-up internet was added to voice telephony. At the same time, cable TV companies began to enter the telephony market by adapting their networks for voice traffic. As both fixed line telecommunication networks and cable TV networks have shifted to broadband internet (using DSL and cable modem technologies respectively), it has become increasingly possible for a single company to offer multiple services over the same network. This change in market thinking has posed significant threats to incumbent service providers through increased market entry and competition.

Multiple play offers users greater choice, convenience and variety. In addition, by subscribing to multiple services from a single service provider, users can pay for all the information services they consume from a single bill. Service providers also benefit from multiple play because it enables some economies of scale and allows for cross-branding and cross-promotions. In this case, incumbents have an advantage compared with new entrants in being able to exploit their existing brands.

As the technologies underlying the internet evolve further, the improved infrastructure and speeds available will improve the potential for multiple play. Higher capacity infrastructure, such as DSL or fibre optic networks, enables faster data transactions and larger data transmissions (e.g., for downloading video). Mobile and wireless networks, such as 3G, WiFi, and WiMAX offer other possibilities. In remote and rural areas, wireless networks can play a significant role, although their speed and capacity are much generally lower that that of wired networks. The added advantage of mobility, which is not available on fixed networks, may help to offset these constraints and open new opportunities, for example, in the provision of video streaming.

Key Issues

Technological challenges

Despite the fact that operators have been increasing their traffic capacity for data transactions, there may still be a requirement to upgrade upstream capacity from the user as today’s network architectures are optimized for user downloads. Applications such as Voice (and video) over IP, gaming and other two-way interactive applications may require symmetrical connectivity. In addition, quality of service is crucial in realizing reliable multiple play. Due to an increasing volume of data transactions, it is not unusual that service providers may cut-off the service if a particular connection becomes too busy. The prioritization of certain real-time services could result in degradation of quality for other data transaction services. For instance, telephone conversations need higher priority, considering the need for instant interaction, not to mention the use of emergency services.

Pricing

Amid the process of development, the pricing of multiple play requires careful planning to avoid cannibalizing profitable revenue streams or making the service on offer too complicated. There appear to be different price points in different countries. What price level is really affordable in different economies? Should multiple play service be offered on a flat rate basis from the start? Will consumers continue to buy individual video streams, as an on-demand service, or as a subscription? Would consumers be willing to pay for video streaming to their mobile phones, even if the picture quality is poor? As OECD concludes, "it is likely too early to judge" on these issues.

Content Delivery

Greater access to wider variety of contents is a key to successful multiple play. In this sense, cable companies have an early-mover advantage given their already established relations with video content providers. Telcos are trying to catch up with cable companies in offering more attractive contents. As the success of Apple’s iPod shows, technological capability alone does not attract consumers, but a wider range of attractive content at affordable prices is required to boost the potential market.

Regulation

Because multiple play results from the convergence of telecommunication, computing and broadcasting, regulatory issues become much more complicated. For instance, in Japan, telcos are simply not allowed to provide a broadcasting service and vice versa. In countries such as the United Kingdom and the Republic of Korea, telcos are promoting a converged fixed/mobile phone service, in which a mobile handset reverts to a fixed-line phone when in the home environment. In Korea, however, regulation currently prevents companies to offer unified billing for multiple play because of existing regulatory separation. Regulation of multiple play becomes more complicated when content is provided by foreign operators. Should they be regulated within domestic laws? If not, how should this business environment should be regulated? For instance, the European Commission requires broadcasters to have 50% of European content. What happens when the services are provided from outside of the EU?

Multiple play is overturning existing business models and blurring existing regulatory boundaries. But do customers really want to buy everything from the same supplier? What types of partnership need to be created to provide content and convenience in the same package? Are today’s technologies flexible enough to supply what customers really want? What is the "right price"?

Relevant Sessions on "Multiple Play" at ITU Telecom World 2006

• Digital Lifestyles Theme Session D: Multiple Play, Monday 4 December, 16.30-18.00
• Digital Lifestyles Theme Session E: Building Tomorrow’s IP-based networks, Tuesday 5 December, 09.30-11.00
• Digital Lifestyles Workshop 2: IPTV (Internet Protocol Television), Thursday 7 December, 10.00-12.30.

Key speakers on "Multiple Play" and relevant sessions include:

• Mr Haggai Barel, Chief Executive Officer, Orca Interactive Ltd, Israel
• Ms Jane Chen, Vice President, ZTE Corporation, China
• Mrs Laina Raveendran Greene, Chief Executive Officer, GetIT, Singapore
• Mr Ted Hsiung, Head of Business Development, CASCADE Limited, Hong Kong, China
• Mr Ron Levin, Home Networking Marketing Manager, Broadband Access Division, ECI Telecom, Israel
• Mr Paul Reynolds, Chief Executive Officer, BT Wholesale, United Kingdom
• Dr Tong Yu, Asia-Pacific Regional Director of Marketing, Harmonic Inc., United States

Notes:

For a more detailed study, see OECD (2005), Multiple Play, Pricing and Policy Trends: Working Party in Telecommunication and Information Services and ITU Internet Reports 2006 (to be published at ITU Telecom World) “Digital.Life”.

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