Brett Sapington - Parks Associates - Digital Home VAS

Presented by:

The Path to Broadband Profitability

Digital Home

Value-added Services:

Brett L. SappingtonDirector of Research,TV and Broadband Services

www.parksassociates.com Slide 2

Trends in Service Provider Strategies

Customer Acquisition Customer Retention

Access Provider Content Resource

Dumb Pipe / Channel Lineup Consumer Experience

Linear Content On-Demand Content

TV-based Video Delivery Multiscreen Delivery

Core Services Monetizing VASAdding VAS

Initial Strategy Revised Strategy

Delivery by Single Technology (e.g. cable or satellite)

Hybrid Delivery (e.g. satellite + broadband)


73%

70%

68%

67%

67%

62%

56%

50% 55% 60% 65% 70% 75%

Premium tech support service (n=207, ±7%)

Online storage/backup (n=224, ±7%)

Parental control features (n=323, ±6%)

Anti-virus software (n=769, ±4%)

Home security service from BB provider (n=99, ±10%)

All broadband households (n=207, ±2%)

No VAS (n=767, ±4%)

% of Broadband HouseholdsSource: Cloud-based Value-added Services©2011 Parks Associates

The Impact of Value-added Services on Subscriber SatisfactionPercentage of broadband households stating high satisfaction with their broadband provider

(6-7 on a 7-point scale where "7" meand Extremeely satisfied)

VAS and Subscriber Satisfaction

www.parksassociates.com Slide 4 4

Premium Technical Support Services

8%

6%

7%

7%

7%

6%

6%

6%

3%

3%

4%

5%

3% 3%

5% 6%

5% 5%

8%

6%

4%

5%

6% 6%6%

5%

8%

7%

5% 5

%

8%

8%

6%

5%

10%

8%

5%

7%

10%

9%

5% 5% 5

%

4%

2%

3%

6%

5%

0%

5%

10%

15% U.S. France UK Spain Italy Germany

% "

Hig

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Lik

ely

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6-7

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a 7

-pt.

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ale

Likelihood of using Professional Technical Support Services (Among Broadband HHs)


Home Automation / Control

Smart home features have existed for years. Are they moving mainstream?

Benefits:• Traditionally for high end homes• Enables advanced features for

security, energy, and health• Hardware costs have fallen• Consumers more open to

convergence / control features

Challenges:• Operators have tried before• Limited as a standalone service• Fragmented market among potential

vendors / partners

Options:• Lighting controls• Thermostat controls• Appliance / power controls• Vertical-specific controls• Other


Home Security Services

Demand for Security Value-added Services“How interested are you in receiving any of the following services from your broadband

Internet service provider?”

0% 5% 10% 15% 20%

Germany

France

UK

Spain

US

Italy

% of Broadband HH

Home monitoring service with a self-installed camera and ability to see home video online

0% 5% 10% 15% 20%

Germany

France

Spain

UK

US

Italy

% of Broadband HH

Want Service(6-7 rating)

Have Service from BSP

Home security service with sensors andcontroller to receive alerts

Source: Cloud-based Value-added Services© 2011 Parks Associates


Energy Services

40% 20% 0% 20% 40% 60%

Ability to remotely control lights, appliances, and thermostats through a computer or mobile phone

Thermostat displays current temperature/weather forecast

Recommendations on how to make my home more energy efficient

Ability to know which appliances are consuming the most electricity

Thermostat that automatically adjusts for comfort when people are at home but savings when people are not home

Lights that automatically turn off when nobody is in the room

% Indicating Appeal of Feature

Not Appealing (rating 1-2) Very Appealing (rating 6-7)

Appeal of Energy-related Value-added Services"How appealing are the following for your home?"

(Among US Broadband HHs, n = 1,500, ± 2.5%)

Au

tom

atio

nFe

atu

res

Info

rmat

ion

Feat

ure

s

Re

mo

te

Co

ntr

ol

Feat

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s

Source: 4Q 2010 Residential Energy Management Survey

© 2011 Parks Associates


Health Services

Health and wellness services are a very early market with growth potential

Benefits:• Valued by consumers who need such

services• Provides services for aging

population

Challenges:• Fragmented market• Multiple vendors with solutions only

for specific health issues• Self-pay for services• Sales channel• B2B vs. B2C

Options:• Senior care• Routine care• Wellness / preventive care• Chronic condition monitoring• Sports / active care• Safety / baby monitoring

http://www.lifestat.ca/public/index.html


Convergence Services

My Unified Services

Combined mobile and broadband features available to those with both services. Same ID and passwords for mobile and Internet features. Merged mail boxes. Access online photo album via mobile or PC. Use virtual wallet on PC and mobile. Increased e-mail storage.

Voicemail ViewerAllows consumers to view landline voice mail via smartphone or PC. Requires download of app to viewing device.

Smart Controls

Internet parental controls application to allow parents to customize access and activity permissions for online and television. Provided for free with broadband and television services, respectively. Version for mobile phone available for $5 per month.

Universal Caller IDDisplays fixed line caller ID on the TV or Internet connected computer. Allows calls to be pushed to voice mail. Requires triple play. No additional charge.

Benefits:• Encourages multiplay• Encourages higher service tiers

Challenges:• More complex support issues

Companion Device Services

• TV Listings

• Programming information

• Remote DVR programming

• Social Interaction


Strategies for Value-added Service Pricing

VAS Offered For Free Fee-Based VAS

Services that drive bundling

Services that minimize support calls / truck

rolls

Services that minimize churn, particularly for

fiber services

Services that minimize cord-cutting / cord-

trimming

Services that drive usage of the service or

push consumers to higher tiers of service

Low cost, network-based features that

provide differentiation

Basic levels of service that promote adoption

of fee-based service tiers

Services that enhance advertising

Services that encourage new Internet users to

get online

Services other operators cannot easily

duplicate

Services with an ongoing cost or hardware

that must be subsidized

Services with an incremental cost for content

(music, gaming, video)

Mobile-specific services

Premium tiers of free value-added services

Technical support services that address “out

of scope” issues for the operator

Value-added services that are building a

business outside of core access services


Growth of Value-added Services

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

2010 2011 2012 2013 2014 2015

An

nu

al R

eve

nu

es

($ M

)

Convergence Services

Health Services

Monitoring and Smart Home Services

Entertainment (video, music, gaming)

Premium Technincal Support

Source: Cloud-based Value-added Services© 2011 Parks Associates

Global Forecast: Annual Cloud-basedValue-added Service Revenues by Type of Service


Brett L. SappingtonDirector of Research

15950 N. Dallas Parkway, Ste 575Dallas, Texas 75248

Direct: 972-996-0215

[email protected]

Contact Information