Sickinghe: pricing game is suicidal
By Robert Briel
September 24, 2009 12.11 UK
CTAM EuroSummit – Lisbon. Service, service, service, and keeping the customer happy, was the message of Telenet CEO Duco Sickinghe during his enthusiastic and inspiring keynote at the CTAM EuroSummit. If the customer is satisfied, he is less likely to walk away to the competition – even if you are not the cheapest provider on the block.
“If you are a high capex organisation, going in the pricing game is suicidal,” he warned the audience. “Cable should get out of there as soon as possible and focus on service.”
Being customer friendly can make all the difference, as Sickinghe illustrated with an example from the US, where the telco Verizon is making big inroads with its broadband and IPTV service. “In the Comcast footprint Verizon is really making big progress, but in the Cox footprint much less so. This is all because Cox has kept their focus on the customer and is perceived as being friendly.” So, “price is a relative phenomenon if you focus on the customer.”
At this point in time, cable is best positioned to deliver the fastest broadband access possible. “The next few years cable has the better broadband quality,” he said.
On the television side, Telenet decided to call its digital television service IDTV, not DTV, where the ‘I’ stands for interactivity. “One hundred per cent of our set-top boxes are interactive. Selling 200 channels to a customer in Flanders is useless. Nobody cares. Flemish people just want access to Flemish content, so we invested in an interactive platform with local content.”
Telenet has been incredibly successful. To give a few figures: Flanders has 71% broadband penetration; Telenet has 41%; 75% of all people have fixed telephony, Telenet 25%, and while 96% of all Flemish people have access to television, Telenet has 85%. With digital television, the figures are 40% and 1% respectively.
VOD has also been a very successful ingredient of the digital TV offer, which is made up of three different products: the on-demand movies (transactional based), subscription VOD for people who buy the Prime premium channels and Broadcasting on Demand, which is both free and transactional. Again a few figures: 52% of all people who use VOD just do so to access Broadcast on Demand content; 87% of all VOD users access Broadcast on Demand and 70% of the turnover of VOD transactions are from Broadcast on Demand.
Talking about over-the-top providers such as Hulu, Sickinghe thinks they can not remain freely available in the long run. “In the US, cable operators are already complaining they have to pay for content which consumers can access for free on services such as Hulu.”
He proposed a solution where people who want access to such services need to be “authenticated” by their broadband provider, for which they pay a fee. This way, people will pay for the service, but it will “feel” like free.