By Frank J. Bernhard
Economic troughs impose difficult changes--painful reminders that the world is operating today on an entirely different set of norms. All part of this cyclical yo-yo effect, the aftershocks of a modern financial crisis give way to harsh lessons in rebuilding. Even commercial real estate finds itself collapsed, figuratively in the absence of office workers but sternly facing the reality of tenant losses. The signs are everywhere, but solutions remain scarce.
What is certain about current times is the broadband operator's fortune to succeed at renewing affinity at subscriber endpoints. Recent academic and industry studies cite the increasing demand and reliance on high-speed networks across individual and business sectors. For many, the loss of broadband service is equivocal to disconnecting electric to their home. Throw the "off" switch, and watch those without seek desperate alternatives to stay connected.
In some ways, broadband has evolved to become the lifeline of our always-connected world. Without it, the jobseeker is paralyzed to find employment. To the diligent telecommuter, an Internet pipe defines the quality of their work-at-home experience. And for the mobile consumer, data services remain a motivating factor for being untied.
So, why not link it all together and exploit the utility of telecom? Network providers such as AT&T recently announced strategic investments in expanding their backbone with 100-Gbps Ethernet service that takes aim at long haul demand. At the demarcation point, other operators steer toward packet optical network platforms (PONP) to embrace 1 Gbps IP services to business customers. All of these capital expenditures and network upgrades assume the inevitable-surging bandwidth and an IP-centric world at the endpoints.
Since 2003, our research shows how consumers fueled this strategy by increasing their wallet-share of allocated disposable household spending by more than 42.7 percent for data services. Taking stock for the dominance in smartphones, premium broadband, and IPTV, this lends credibility to the notion that IP connectivity is both essential and relevant to the majority of telephony subscribers in North America today. Normalized for presumed cost increases, we understand that this percentile figure reflects more about the willingness of consumers to spend for incremental service utility and thus achieve higher satisfaction.
In protracted economies such as this one, rational buyers look to the advantages and value performance that broadband delivers. Similarly, they explore ways to conserve their monthly expenses and lean toward seeking productivity at the least possible cost. Bridge the connections between utility and value, then you begin to see just how intertwined your customers become with managing their monthly outlay.
And for some, the reliance grows to a point where satisfaction leads to experimenting with more advanced service solutions that blur the lines between wired and wireless. Take unified communications (UC), cloud applications, and IP-linked services in a jujitsu-style match up. And who is the ultimate winner? In the short run, it is the network providers who can make everything work seamlessly and reliably to the greater benefit of the subscriber. Long term, though, the real champion is the loyal customer following that takes their converged world to a whole new level of productivity.
Despite the pain and myopia of cost-cutting, don't let the best days of convergence pass you by. Choose to identify these emerging buyer endpoints, and bring the reality of evolving broadband to your future balance sheet.
Frank J. Bernhard, a technology economist and managing principal of OMNI Consulting Group's telecommunications practice based in Davis, California, is the author of FierceTelecom's biweekly column Telconomics. He can be reached at [email protected]