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Lead with Content & Services, Not Bandwidth
What is more valuable to consumers – a pipe or the water that flows
through it?
By: Bruce Bahlmann - Contributing Author (your
feedback
is important to us!)
Created: July 21, 2005
This paper is the product of
Broadband Market Research which is available from Birds-Eye Network Services.
Bandwidth is important, of course, but are we marketing
Mbps at the expense of telling consumers what the bandwidth will mean to
them? Listen to what
Tony Werner, CTO of Liberty Media Corporation is saying: “They
[consumers] want it and they are willing to pay a premium for high-speed.”
Brian Roberts, CEO of Comcast, has a better line: “The day is coming
when, in 45 seconds, you can download a movie [to a personal computer].”
From a consumer standpoint these statements don’t go as
far in defining consumer benefits as did the once powerful AT&T during one
of its aggressive advertising campaigns. AT&T coined the slogan “You Will!”
For those too young to remember that far back, the
1993/1994 “You Will” advertising campaign featured the voice of Tom Selleck.
He posed all these neat and exciting uses for telecommunications,
highlighting their convenience. Each “You Will” advertisement made people
think “Wow I didn’t know you could do that” while AT&T’s answer was “You
Will.”
The implied emphasis was that it would be AT&T that
would be the party responsible for bringing such convenience and technology
to you. The difference between the “You Will” claims and those made by
today’s providers like Liberty Media and Comcast is that technology is
nearly here for such services to become economically available.
Interestingly, AT&T chose to not sell “bandwidth” as
the killer application but rather services that consumers might want: video
phones, advanced messaging, high-integration services that combine video,
voice, and data to produce really cutting edge conveniences for consumers.
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There is something to be said about what AT&T was selling to
consumers. Rather than selling something abstract (bandwidth) AT&T
sold people on the idea of modern convenience and on the promise
that AT&T would be the one to delivery such convenience. |
While AT&T clearly failed to deliver on the “You Will”
promise (the bandwidth for such services never evolved rapidly enough),
there is something to be said about what AT&T was selling to consumers.
Rather than selling something abstract (bandwidth) AT&T sold people on the
idea of modern convenience and on the promise that AT&T would be the one to
delivery such convenience.
I loved those ads because it got me excited about the
technology. It got me to think of what is possible and it got me to look
into the future.
What Are You Selling?
This marketing strategy is still sound. Sell consumers
convenience (things they can do, things they can use) rather than abstract
technology (bandwidth) or the ability to do the same things you do today
only faster. Where is the imagination in being faster or in selling abstract
things to consumers?
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Where is the imagination in being faster or in selling abstract
things to consumers? |
One could equate this concept of selling content rather
than bandwidth to the purchase of a fast sports car. With a fast sports car
you can go from 0-60 in seconds. That’s great, but that’s the main advantage
of the product. If you are only going 25 or 35 through town, or driving long
distances at 65, your experience is something quite different: boring and
frankly uncomfortable. Remember that fast cars are not designed to be
pleasurable for routine driving, either for long distances or in constant
stop-and-go traffic.
Fast cars are designed to go fast. That is what they do
best. If they were designed otherwise, they wouldn’t be fast. Building fast
broadband services is a lot like that. If you focus on building out fast
services, you need to pay a lot of attention to infrastructure purchases
like routing, caching, provisioning, packaging, marketing slogans, partners,
and the like.
While you are doing all that, you can lose the message.
What are you ultimately delivering to consumers? Are you delivering a fast
service or are you enabling your network to deliver specific services that
require high bandwidth? If the objective is the latter, why would you lead
with the offering of a high bandwidth service rather than what people would
use, such as the video download service described by Brian Roberts?
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To put it another way: What does a broadband service provider do
best? Does it provide bandwidth best or does it provide
entertainment and information services best?
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It is like selling someone the ability to get up to 60
in seconds, rather than selling them the car. Note that once you get up to
60 there really isn’t that much difference between various competing
services – with today’s products – so why all the focus on speed?
To put it another way: What does a broadband service
provider do best? Does it provide bandwidth best or does it provide
entertainment and information services best?
Marketing Bandwidth
Going from 3 Mbps to 6 Mbps or going from 6 Mbps to 16
Mbps may produce a noticeable speed differential. But at some point, unless
you come up with new services, consumers will hardly notice the speed
increase, even if you double the bandwidth. When such bandwidth increases
become hardly noticeable, you will no longer be able to modify the shape and
size of service to command a premium price (or even the same price) from
consumers. Similarly, you will not be able to shape and size the service to
produce a largely noticeable increase in user experience.
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At some point, unless you come up with new services, consumers
will hardly notice the speed increase, even if you double the
bandwidth
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Obviously, the narrower the pipe (lower the bandwidth),
the fewer services your broadband customers can legitimately receive, at
least optimally. With that said, the higher the bandwidth, the more services
each customer can receive.
There is a saying in broadband that if you build it
they will come. But if you build out large bandwidth pipes to your broadband
customers without offering content and services to fill that bandwidth, some
other company will be happy to fill that spare bandwidth for you. That
limits your captive, patient audience for new services as you roll them out.
Such a strategy may in fact limit your ability to break in with such
services. Your expected consumers will already be used to features and
branding of alternate service providers.
The AT&T “You Will” strategy comes full circle here.
Perhaps they were right to get people excited about new services before they
had the infrastructure to deploy them.
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To emphasize: Content is what drives demand, which in turn drives
consumption. Without content there would be no demand.
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One cannot overlook the value of content – everything
else is subservient to it. Broadband service providers today are not taking
the flip side of that problem seriously. They are moving full bore to build
out the infrastructure before they have all the applications, services, and
content required to fill the additional capacity.
To emphasize: Content is what drives demand, which in
turn drives consumption. Without content there would be no demand. Building
customer awareness of services as well as their availability needs to be a
focus at some point. Without that, consumers will exploit their new
bandwidth to best suit their needs.
The Cell Phone Phenomenon
One doesn’t have to look far to find an example where
services rather than bandwidth is being sold. A cell phone is capable of
achieving something like 380 kbps worth of bandwidth. That fact is not very
well publicized for these small wireless devices. Instead of bandwidth facts
and figures, the product literature and advertisements give consumers an
abundance of information about what you can do with these devices including
text messaging, Internet access, voice mail, paging. Many of these services
are offered to you by your cell phone provider for an additional price.
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Cellular companies won’t let the bandwidth genie out of the
bottle and sell you raw bandwidth on their network. They will gladly
sell you services and content.
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What is interesting is that cell phones only consume a
tiny portion of this available bandwidth. Currently very few (if any) can do
multiple things at once (for example browse the Internet or send a text
message while talking on the cell phone).
As multitasking becomes the norm, the bandwidth used by
these devices will increase exponentially. So will the need for more
bandwidth. However, one thing will be certain, cellular companies won’t let
the bandwidth genie out of the bottle and sell you raw bandwidth on their
network. They will gladly sell you services and content.
Broadband Genie Has Escaped
In the case of broadband, the bandwidth genie is out of
the bottle. Selling raw bandwidth to consumers is entering the commodity
phase. This year saw the beginning of price wars over broadband bandwidth.
Still, selling increasing amounts of bandwidth without having a stockpile of
ready-to-go content to fill this bandwidth will be short lived.
Bandwidth fees will continue to decline. Once consumers
really figure out how much bandwidth they need to get by, these rates will
be less than what the cheapest phone rates are today. After all, not
everyone owns a fast sports car. Many settle for a Yugo.
Thus, the future of broadband services will not be
shaped by the size and scope of the bandwidth offerings as it is today.
Rather it will be defined by what content is available and how well these
services support the multitude of consumer devices available. Content
download and streaming rights to the multitude of devices, as well as the
usability and convenience at which consumers can manipulate this content,
will be instrumental to the success of broadband service providers. They’ll
need it, not only to lure new customers but also keep the ones they
currently have.
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