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R: 2013 will see the first digital home offerings in Spain

Antonio Rodriguez del Corral

Antonio Rodriguez del Corral

Antonio Rodriguez del Corral, director of business development at Spanish cableco R, on the urgent need for Spanish operators to find new revenue streams, the potential for digital home offerings to fill this gap, and the likely unwillingness of consumers to buy packages from low-cost operators.

Antonio will be speaking at the Digital Home World Summit 2013 event, taking place in London on 18th-19th June. For more information and to register, please visit www.digitalhomeworldsummit.com.

Operators urgently looking for new revenue sources

Antonio observes that the Spanish telecommunications market has been undergoing a tectonic shift since 2011, when market leader Telefónica started a price reduction strategy that he estimates has cut consumer prices by as much as 30% across the industry – including fixed services, mobile services and the elimination of terminal subsidies.

“This move has resulted in a general contraction in profitability per customer for all operators, but has not significantly reduced Telefónica’s churn. As always, reductions in profitability have led to falls in capital expenditure and operating expenditure, and Spanish operators are now examining all types of cost-cutting measures.”

Antonio believes that this process has made it increasingly urgent for operators to increase their revenues, but with limited capital expenditure. New sources of revenues have to be found in products other than the typical quad-play bundle, given that these are the focus of the current price war, he adds

Digital home as an alternative

“2013 will be the year of the first commercial offerings related to the digital home,” predicts Antonio. “Two or three operators are ahead of the pack and others will follow in 2014. In the Spanish market, operators will go after low-cost digital home offerings, with price ranges under €15. The economic crisis and the market conditions leave no other choice.”

He adds that this low price point will send signals to all companies involved in the creation of the digital home products, causing equipment to be simplified, platforms to be streamlined and operations related to digital home made as simple as possible – and if possible self-serviced.

“The services included in a possible “digital home bundle” will have to be carefully crafted to avoid any “unused and deployed sensor” that, with such a narrow revenue target, could derail the business plan,” he warns.

Digital home is not for everybody

Antonio believes that low-cost operators in particular may struggle to get a toehold in this market, as customers may be wary of handing over the digital equivalent of the keys to their house to low-cost operators with below-average customer support.

“There there could be an opportunity here for OTT providers, but in general OTT providers do not like to create ‘operational companies’ so there is a clear barrier there too,” he adds.

“Local or regional operators meanwhile have a clear opportunity in the digital home market: they might be trusted as providers of good support, and are big enough to address the opportunity.”

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