Quad-play: playing the long game

There has been a lot of talk about "quadruple-play" services in Europe of late, particularly following Vodafone's announcement that it plans to buy a cable operator in Germany in order to offer high-speed broadband and IPTV services as part of bundled plans that include mobile offerings.

Of course triple-play has been with us for some time, and Vodafone wants to be able to better compete with existing fixed triple-play providers that are also now getting into mobile through MVNO deals, as has been seen in Spain.

So far, multi-play is very strong in France and Spain, where all mobile operators have some sort of bundled or discounted multi-play offering and some have well-developed quad-play plans, such as Movistar Fusion in Spain, Orange Open in France and SFR Multi-Packs.

However, quad-play is still fairly thin on the ground across the rest of Europe, which suggests that not all operators have made a decision about this approach. Certainly, such services are not going to appeal everywhere, and will only suit certain types of players with the right kind of network assets or ability to partner.

The ultimate aim of such plans is to lock in more customers by tying them into more services, making it more difficult for them to churn. In order to tempt customers to sign up in the first place, discounts are used as an acquisition tool in may cases. For example, operators promise that the cost of four separate services combined into one bundle is cheaper than buying all four separately.

Indeed, without such discounts it's hard to see how operators would attract users to quad-play plans: what would be the benefit to consumers, other than perhaps the convenience of having one operator for all their services?

A recent report from the Wall Street Journal suggests that discounting will not necessarily be used for mobile services as part of quad-play plans. It notes that in Germany, for example, Deutsche Telekom tends to resist discounting, and Vodafone is unlikely to want to be the first to cut mobile prices in what is already a difficult competitive environment.

The report also notes that quad-play bundles offered by Virgin Mobile in the UK have seen little traction because UK mobile tariffs are already fairly low: Just 16 percent of cable operator Virgin Media's customers buy quad-play bundles compared with two-thirds who buy all three fixed-line services.

"Certainly, the appeal of quad-play varies market-to-market; quad-play offers may gain traction in a certain country at a certain time, but prove much less popular elsewhere," said Natasha Rybak, a principal analyst at Current Analysis who closely tracks multi-play developments.

Rybak noted that the promotion of quad-play is also not just limited to fiercely competitive markets such as Spain and France. "Swisscom has offered quad-play bundles for quite some time, for example," she said.

Although operators might be resistant to the idea of mobile discounts--and with good reason in view of their current difficulties--when it comes to quad-play it's all about playing the long game.

"While cutting price to craft an attractive quad-play bundle can clearly cost operators in the short-term, it's also clear that getting customers to commit to bundled service packages helps to mitigate churn, ensure longer lock-in and potentially drive up ARPU over time," Rybak said.

Quad-play isn't just about short-term customer gains: it's also about investing in a long-term customer retention game plan, she said.

At the same time, quad-play bundles or multi-play are not the only options open to operators if they want to encourage customers to subscribe to a number of different services. "Offering cross-service discounting, loyalty benefits and other perks is a complementary way to get subscribers on board, keep them, and hopefully, keep them satisfied,"  Rybak said.

For operators such as Vodafone Germany, irrespective of the strategy they choose they have already clearly decided that in some markets mobile is no longer enough. Quad-play is just one option to consider.

Of course someone always has to go one step further: Bouygues Telecom is now boasting it will be able to provide a "quintuple-play" offering by adding home protection and energy management services to its Bbox Sensation plans through partnerships with electricity management service provider Ijenko and MicroEJ.

What could be next? The options could be endless. -- Anne

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