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KPMG Study Offers Dim View on Revenue-Generating Potential for Converged Services

New information on consumer willingness to pay a premium for converged services is being unveiled today by KPMG LLP. And the news aint good.

As the industry moves toward converging voice and data on cell phones, many consumers say they might be unwilling to pay a premium for them, according to the audit, tax and advisory firm.

In a survey of 3,576 global cellular customers, 37 percent of the North American respondents surveyed said they would not pay a premium over and above their current bill on converged services. Just 20 percent indicated a willingness spend only up to 10 percent more than their current bill.

Yet, a different KPMG study reports that 44 percent of global telecom executives are projecting revenue growth of at least 15 percent between now and 2007. Of those surveyed, 57 percent of those executives attributed the expected growth to new products and services, followed by 46 percent who said growth of customer base, and 38 percent who expect growth on spending from existing customers.

Carl Geppert, national sector leader for KPMGs Americas Communications and Media Practice, said it is time for the wireless telcos, wireline telcos and cable TV providers to develop a specific new business model for mobile converged services. He suggested service providers follow the Internet business model of providing a service offering so compelling that it attracts hundreds of thousands of eyeballs which in turn are attractive to third-party advertisers.

He added that service providers should use enhanced and bundled services to deepen customer relationships and allow other parties to reach users, delivering a loyal subscriber base that is attractive to advertisers and digital commerce partners. Attempting to exploit converged services purely to squeeze more cash from consumers on a traditional subscription model will not work, he said.

Here are some other interesting tidbits from the first KPMG study:

* About 90 percent of North American consumers stated a preference for a single service provider, and 89 percent desired one consolidated bill for all the services they use.

* North American consumers listed the cell phone as the means by which they preferred to consume all types of media, except music.

This indicates a preconditioned comfort level with the cell phone as an all-purpose multimedia terminal, which is a positive sign for convergence services providers, Geppert said.

* The top-ranked capability on mobile handsets is Internet access, with taking and sharing photographs second, and e-mailing capability third.

* Among those interested in consuming video on their cell phones, movie trailers or short movie clips were at the top of the list of preferred content. News clips were second and sports clips were third.

KPMG LLP www.us.kpmg.com

 


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