Triple Play
Business Week Online has this article about triple play in telecommunications gear. There’s an interesting interview with Ken Leon, analyst at Standard & Poor’s Equity Research.
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Q: Is this the big trend in the industry? How will equipment makers benefit?
A: Everyone thinks the big trend is “triple play” — which is the ability of a service provider, both cable and telecom, to offer voice, data, and video, all on one platform. We think this will be taken to an even bigger level, which is the convergence of wireless with broadband fixed line networks (see BW Online, 10/21/05, “Wireless Goes Boom”).
The industry has been developing a standard for this the last few years called IMS - which is Internet Multimedia Subsystem standard — which has allowed the vendors to in the last year or so to develop products capable of offering services seamlessly to a user who moves between a mobile network and a fixed network for all their services. We think that’s very powerful.
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Q: In general, what’s the strategy of equipment suppliers? Are they still highly reliant on telecom operators’ spending budgets?
A: The telecom operator and cable television markets are very consolidated. If you look at any region of the world, there are three to five service providers that command more than 75% of capital spending in each region. So there’s been enormous uptake in the pricing power of the buyer, and this has put pressure on the equipment vendors to not only offer best-in-class capability, but also offer other things to get value-added pricing. This means professional services to install or manage those networks, and also giving support services to these large carriers.