This month I had the opportunity to attend LightReading’s Future of Cable Business Services 2015 and I was excited to see the momentum that this market is gaining among Multiple System Operators (MSOs). Several of them are making heavy investments and creating separate teams within their organizations, for example Charter created Spectrum Business and Cablevision created Lightpath, to focus on growing Commercial Services. These are services, such as Ethernet, Internet Access, Managed Voice and other Advanced Managed Services (for example, security, routing or business continuity), that target small and medium businesses (SMB) and large enterprises (LE).
And this momentum is not a surprise. According to financial analyst Craig Moffett, in order to keep the capital investors’ interest, MSOs need to maintain at least a 4.1% gross profit growth. Given the challenges in traditional business segments (such as video cord cutting due to OTT competition that has an impact on the video subscriber growth, and the jeopardy of an almost saturated residential broadband market and pressure to regulate its pricing) Commercial Services stand up as the best bet for MSOs to sustain growth. Now, in order to compensate a potential slowdown in the residential broadband market, Commercial Services growth contribution should at least triple in the next few years.
Although it is an aggressive target, the market is real and ready for competitive and high quality service offerings. According to LightReading’s research, the US has 27.9M businesses, most of them SMB or small office/home office (SOHO). These companies’ spending on telecommunication services is about USD 150B (USD 50B – 70B from the SMB Market). MSOs have an 8% market share, again most of it coming from the SMB market, which means that there is room to grow, but the question is how to convert captive customers and quickly expand their market share.
This disruptive growth calls for a clear strategy supported by organizational, processes, and systems changes. OSS software companies become a key differentiator and catalyst for this transformation, bringing the following capabilities to the mix:
- Reducing time-to-revenue for services by introducing one-touch-provisioning or automated service activation for commercial services across the network. Manual activation becomes ineffective when aiming for accelerated growth.
- Gaining customers’ trust by giving constant visibility of the contracted SLAs. Self-care portals provide businesses with a window into the quality of its network and service, helping them overcome the misconception that MSOs are not ready to serve the enterprise market.
- Increasing installers’ effectiveness and first call resolution rates by giving Tier 1 organizations service assurance tools to certify that the contracted service is the one being rendered at the installation and during the product’s life cycle.
- Enabling Dynamic Services to be launched, such as bandwidth on demand or specific cloud-based or virtualized managed services in order to enrich the commercial offering.
- Eventually facilitating the execution of traffic trading among operators to rendered national services, which has been one of the main entry barriers for MSOs in the enterprise business.
One way or another, it seems that the need is there, as well as the will, so it is prime time for MSO Commercial Services, and as part of the industry I am eager to ride the wave.
Image source: Craig Moffett | firstname.lastname@example.org