Two core services in two separate industries are losing favor with customers, leading some analysts to compare the once former cash cow’s of their respective businesses into melting ice cubes. I’m referring to voice service for the telco industry and video service for the cable industry.
If you’ve been in telecom, you’ve heard for years that voice is a dying business, and telcos need to diversify beyond their dependency on voice services. Don’t diversify at your own peril, some will argue. This same rhetoric now makes it into the cable industry, where traditional video services are now seen by some as a ‘dying on the vine’ service.
I attended the Independent Cable Show this week, where Media Metrics industry analyst Laura Martin proclaimed video services as ‘dead,’ and urged independent cable operators to focus the future of their business on broadband, mobility, and business services. Sounds very familiar.
This melting ice cube analogy is quite interesting, especially considering each of these two industries is now actively poaching customers from each other. Telcos are taking cable video customers, and cable companies are taking telco phone customers. In fact those two business lines (video for telco and voice for cable) represent one of the best growth engines for each of their respective businesses.
It’s kind of puzzling. If a phone company is losing telephone customers, why is a cable company gaining them? Vice-versa for video customers. If customers really want those services, why not just get them from their incumbent provider?
Telephone customers are leaving phone companies for cable companies because they perceive a better value. That value may be based on price, convenience, features, or a combination thereof. Is it fair to suggest that if phone companies were able to match or exceed the perceived value offered by the cable company, customers wouldn’t leave in the first place?
The same may be true for video. TelcoTV services are taking video customers away from cable companies (although at a much slower rate than cable taking phone customers). Shouldn’t cable have seen this coming and addressed their video product to stop the defections?
The lesson here in my opinion has to do with innovation and paying attention to customers. Service providers do their long term business a disservice if they wait for a competitor to jolt them into product innovation and market assessment. Those tasks should be built into the culture of the service provider – always looking to innovate core products and regularly checking the pulse of customers to ensure those services are meeting their expectation.
If done properly, maybe customers wouldn’t leave in the first place.
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