Operators continue to have mixed feelings about quad-play

Quad-play or multi-play strategies got another airing this week, as one operator hailed its success in bundling fixed, mobile and TV services together and another raised doubts again over the appetite that consumers are likely to have for such service bundles.

TalkTalk reported its third-quarter results this week--covering the three months to end-December--and clearly attributed its 4.2 per cent revenue growth to the "strongest growth ever in aggregate take-up" of TV, fibre and mobile products. Indeed, the UK-based fixed provider, which has signed up to use O2 UK's network for its mobile service, said it gained 50,000 new mobile subscribers in the quarter and accounted for 11 per cent of the UK SIM market for the month of December--ahead of both Vodafone UK and Tesco Mobile.

The slightly worrying aspect of TalkTalk's third-quarter figures is the impact that acquiring customers is having on its costs. Indeed, the company said full-year EBITDA is expected to be towards the lower end of market expectations, and CEO Dido Harding said cost savings associated with improved customer experience and lower churn "are taking longer to come out," Reuters reported.

These more negative impacts will no doubt be further grist to the mill for companies such as Three UK, whose CEO David Dyson this week reiterated his doubts that there is a consumer appetite for quad-play. Three UK does not have a quad-play strategy and it suits the company to downplay the impact of any moves along this route by rivals; instead, Three has traditionally focused on selling large or unlimited bundles of mobile data and buying O2 UK would certainly boost its presence considerably on the UK mobile market.

Three is perhaps starting to look a little lonely in its anti-quad play quest as rivals such as Vodafone UK consider their fixed options and fixed players including BT, Sky and TalkTalk add mobile to the mix. However, the jury is certainly still out on certain aspects of quad-play strategies, and indeed any multi-service bundle is only as good as its worst service, as Orange executive vice president Pierrick Hamon told me last year.

"The battlefield for convergence is the high-end market," Hamon said. "The challenge is to be excellent at cross selling the services…and the quality of each service has to be excellent."

In more price-sensitive markets, Hamon noted that retaining separate services makes more sense.

For today, I'll give the last word on the subject to CCS Insight: the company has just carried out a survey in the UK that found people's appetite for multi-play services grows as they own more devices. It also found that over 40 per cent of respondents without a multi-play subscription would consider signing up to a bundle of three or more services.

It's still early days in some markets such as the UK, but as CCS Insight notes: "The competitive landscape is set to change drastically over the next 12 months as BT returns to the consumer mobile market and Vodafone readies a consumer broadband offering."--Anne