Service providers spending nearly 40% of capex on triple play

April 27, 2006
Interesting survey from Infonetics that I thought I'd share regarding Triple Play expenditures. Service providers are really starting to ramp up their spending. Service providers around the globe see triple play services not merely as a means of increasing top-line revenue, but as a means of self-preservation, says a new study by Infonetics Research. Network operators are redefining and realigning themselves to be the one-stop shop for all things digital for residential and enterprise subscribers, and they believe triple play services will give them the competitive edge they need to succeed.

Take as evidence the fact that North American, European, and Asia Pacific service providers participating in the study ("Service Provider Plans for IP Triple Play") report that on average nearly 40% of their capital expenditures were spent on triple play network equipment in 2005.

The majority of service providers in the study plan to further increase capex spending in the next 12 months on IPTV equipment, broadband CPE, broadband aggregation equipment, and voice over broadband equipment, and they expect revenue growth in all areas of triple play services in the next 12 months.

And a big chunk of revenue it is: The average percent of total company revenue from triple play services ranges from 43% to 48% between 2005 and 2007. (Infonetics interviewed a mix of large incumbent providers and smaller, more focused providers; for the large providers triple play revenue represents a much lower percentage of total revenue.)

"With nearly 40% of their capex budgets going to triple play service infrastructure, service providers are sending a clear message that the combination of voice, data, and video services is a long-term differentiator for them," said Jeff Heynen, directing analyst at Infonetics Research. "Carriers are demanding complete interoperability, full standards compliance, and an open and flexible architecture from their suppliers to ensure the content and services they provide will work right out of the box and far into the future."

IP voice is a big draw for triple play providers, but it's video that's really the newest, most exciting, and most technically challenging part of triple play services, and IPTV is where all the action is. In fact, all but one of Infonetics' service provider respondents already offer IPTV, and that one offers it by 2007.

Sample Findings
   -  The top 2 drivers for respondent service providers deploying triple play services are 1) increased broadband revenue per user and 2) new revenue streams
   -  58% of respondent service providers rate vendor interoperability a key technical challenge when rolling out triple play services
   -  The most pressing business challenge triple play service providers face is securing broadcast and on-demand video content; acquiring content is also a challenge
   -  iTV (interactive TV) is the fastest growing video service offered by service providers, bringing Internet capabilities directly to the TV screen, including instant messaging, shop at home, click to call and click to purchase capabilities, and, most significantly, online gaming services.
   -  2/3 will deploy IP/Ethernet DSLAMs by 2007
   -  67% rate low cost very important when considering IP set top box features
   -  Though more respondents currently use Cisco for their triple play aggregation, when it comes to unaided brand awareness for triple play infrastructure providers, Alcatel leads Cisco, and Microsoft is third

Infonetics' triple play study examines the trends, drivers, barriers, strategies, and implementation plans of North American, European, and Asian services providers offering triple play services, and includes their product expenditures, preferred manufacturers and products, services offered, technology choices, and more.

Infonetics also offers an IPTV Equipment forecast, including subscriber, revenue, and capex projections through 2009.

Download sample data at www.info.infonetics.com.

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Comments to Service providers spending nearly 40% of capex on triple play


  1. Alen Wilson :
    May 1, 2006 1:26 AM

    Can you please tell me what's this triple play. What is its meaning. Please explain me, I am ameatuer in this field.
    Thanks
    Regards,
    Alen Wilson


  1. Loic. :
    May 16, 2006 10:22 PM

    Unless another official definition comes up...

    Triple-play is a service offered by most of the ISP in Europe. With a single box, the subscriber can access Internet, TV and telephone.

    This box (aka set-top-box) is :
    - a DSL modem/router, to provide Internet
    - Wifi AP, to provide wireless access to Internet
    - SIP client to provide telephone access
    - mpeg4 decoder to provide TV

    In France for instance, the box also is a ADSL2+ modem that means that the subscriber accesses Internet at 20Mb/sec. The box provides more than 80 channels, some HD-TV channels and some VOD (Video On Demand). The telephone calls are free for national (France) and internatonal (major countries, like US, China, etc.) including mobiles (for US and Canada for instance). The box includes a media player, so all computers connected (via wifi or ethernet) can send their video/picture on the TV (the box is connected to the TV). The box includes a hard drive so it can be used as a PVR. The box can be used as a base station for Wifi/GSM mobile phone. The box is free and the subscription is 30 euros/month. This price includes free phone calls, around 100 TV channels and 20Mb/sec internet access.

    This is the triple-play. Well, with the box used as a base station, they call it quad-play (Internet + TV + fix phone + mobilephone). This is the "convergence".


  1. satheesh kanduru :
    January 3, 2008 9:22 AM

    I guess , the report has stretched the capex spend on IPTV , and in reality it is not so , we have very trustworthy info from CSPs to defend my point . if anyone is interested can mail back me for further info

    May be the report is true for a very small portion of CSPs but in general it is not the case.

    -- satishk


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