MOUNTAIN VIEW, Calif. - Feb. 27, 2014 - Stratecast | Frost & Sullivan's survey of 2,035 consumers from North America reveals a sea change in preferences for communication services. The results indicate the market is evolving toward a new dynamic in which services are simply applications delivered via an Internet Protocol (IP)-based connection, whether wired or wireless. The survey also shows consumers find broadband connections sufficient for voice telephone and subscription television, in addition to a preference for bundled services. However, the new bundle evolving is unlikely to be a quad play (voice, video, Internet access, and wireless), but is increasingly a dual play of landline and wireless broadband. Services, therefore, may one day look more like applications, easily downloadable via an app store.
Stratecast | Frost & Sullivan's new Consumer Communication Services Preferences: The New Quad Play is a Dual Play analysis highlights findings from Stratecast's most recent Consumer Preferences Survey, and provides strategic recommendations for providers. The results show that residential consumers rate Internet service the highest in importance, followed by wireless, subscription video, and then voice. Statistics related to the services consumed concurred with these rankings, with 97.3 percent of respondents subscribing to an Internet service, and 78.9 percent subscribing to landline telephone service. Finally, among other results, the survey found that Internet usage now exceeds conventional television viewing for more consumers with a data connection.
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"The implications of these results portend a transformation in consumer perceptions," said Stratecast | Frost & Sullivan Consumer Communication Services Program Manager Mike Jude, Ph.D. "Our findings made it very clear that consumption of the services that ride access channels - voice and video - are in decline. It begs the question: does this mean the two access services, broadband and wireless, are increasing in importance to consumers? The simple answer is yes."
Basic Telephone Service: Not Quit Dead Yet
While it is true that landline telephone service is continuing to erode, with year-over-year annual erosion approaching 3 percent, the survey found that nearly 79 percent of respondents still maintain a landline telephone service. However, more than 25 percent indicated they had dropped a landline service in their lifetime. At its peak, landline telephone service was used by 95 percent of consumers; however, factors like cellphone ownership, price and mobility continue to erode this figure.
Subscription Television: A Declining Notion
Landline telephone service is not the only area where consumer interest is waning, as subscription television service also shows a slow to negative growth dynamic. In fact, conventional cable subscriptions show a marked decline, down 12 percent in the third quarter (Q3) 2013 from Q3 2007.
Broadband: The Evolving Everything Service
Broadband Internet access is a growing market. With year-over-year growth at 3.7 percent from 2012 to 2013, the survey showed satellite-delivered broadband as well as fiber and cable continue to have considerable increases, while DSL is declining. This makes it clear that Internet access technologies that deliver higher throughput than older copper-based technologies (like DSL) are growing in popularity among consumers. Stratecast predicts DSL will see a significant dive in subscriptions in the years to come.
Wireless: A New Mobile Dynamic
Wireless continues its inexorable penetration among consumers. Subscribership, especially in the prepaid space, is increasing, although at a slower pace than in the past.
"The slowdown in wireless is due to subscriber saturation, and also because subscriptions can cover more than one device," said Jude. "The bigger picture is the fact that consumers are increasingly harnessing mobile devices as a medium for the delivery of data-based applications. Services are now applications, mostly written in software, and instantiated over IP-based connections. The old quad play is now the new dual play of landline and wireless broadband."
Consumer Communication Services Preferences: The New Quad Play is a Dual Play is part of a tailored Stratecast (http://stratecast.frost.com) client engagement service, Strategic Perspective and Insight for Executives (SPIE). Stratecast SPIE subscribers receive a steady stream of forward-looking and detailed insights on market opportunities and industry trends based on a structured combination of demand- and supply-side research.
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