The emphasis on broadband continues to dominate most communications service provider (CSP) investment plans. Drivers depend on the individual CSP, but typically include a combination of factors including competitive pressures, shareholder demand for increased revenue opportunities, and growing consumer demand.
We’re also seeing continued shifts in technology adoption leading many CSPs to accelerate updates to existing broadband networks. Many VDSL2 and FTTH deployments are in fact augmenting or replacing existing ADSL2+ networks as bandwidth consumption exceeds available capacity. The increased capacity afforded by VDSL2 or FTTH networks opens up new revenue opportunity while providing added functionality that can reduce OPEX and improve customer satisfaction. Examples include VDSL2 vectoring which improves performance and predictability – both key elements to improving customer satisfaction.
Herein lies the triumvirate of factors that will ultimately create a new business dynamic for CSPs as they focus on transforming their businesses from voice-centric to broadband-centric. Reduced operational expenses, customer satisfaction, and increased revenue opportunity.
Reduced operational expenses – It’s no secret CSPs are using fewer employees to operate both wireline and wireless networks. This necessitates a focus on efficiency in network operations since individual technicians and operations staff are tasked with performing multi-discipline duties such as installing or activating broadband premise equipment and troubleshooting Wi-Fi networks. Another example of efficient operations is the ability to remotely diagnose network or premise issues which reduces the dependency on sending a technician via a truck-roll to fix a service issue.
Customer satisfaction – Competition is fierce and customer retention is what keeps CSPs in business. The wireline broadband industry has an estimated average churn of approximately 1.5 percent depending on the size of operator. Churn is affected by a number of factors including service pricing, seasonality and promotions. However, the biggest contributor to churn is poor customer service. Earlier this year, the Accenture Global Consumer Survey reported that 2 out of 3 customers that switch do so because of poor customer service. The ability to address service issues in a timely manner can be seen as an example of poor customer service.
Increased revenue opportunity – VDSL2 and FTTH upgrades typically provide anywhere from 2 to 40 times as much bandwidth as ADSL2+ networks. This of course is ample bandwidth for enhanced service bundles that increase ARPU. But CSPs are also focused on extracting value from services that don’t necessarily require a significant amount of bandwidth. For example, CSPs are beginning to expand into the area of consumer IT services. Windstream is a good example of a CSP that is leveraging broadband to grow revenues through their PC Protect service which provides IT expertise to residential consumers.
Location specific broadband hardware, of course, is the key to enabling network transformation. However, it is my opinion that software will be the key to helping CSPs transform their businesses. As an innovator in broadband access, Calix continues to expand the solutions we provide that help CSPs transform their businesses. Compass by Calix is a unique suite of cloud-based software applications that focus on helping CSPs of all sizes reduce operational expenses, improve customer satisfaction, and increase revenue opportunities.
Over the next few weeks, I will provide a more detailed view of how CSPs can leverage software tools to address key business challenges and how Compass by Calix contributes to successful business transformation.