Strategy for Broadband Telephony

Strategy Paper for Overcoming DTAG Market and Technology Advantage

This paper was created for a venture capital company and subsequently used to target cable accessible markets in Germany. The paper has been parsed in this forum to separately cover Digital TV, Broadband Data, Video on Demand, Telephony, Interactive TV, Gaming and Colocation.

TELEPHONY

Telephony is another DTAG strongpoint. However, telephony has the potential to be just as ubiquitous a service within the enterprise as cable tv. Telephony in the form of Voice Over IP (VOIP) should be offered by the enterprise to residential and business customers. The enterprise can offer telephony cheaper than, quicker and with more bells and whistles than DTAG.

My strong suggestion is to take DTAG's market share by offering better value. Value is measured by customer costs+options+customer satisfaction+enterprise costs=value. The same DTAG arguments offered in the Broadband Data section of this document, hold true in Telephony also. Using agreements with bandwidth providers and reciprical agreements with LECs, the enterprise can compete with DTAG by:

1. Offer lower monthly basic fee

2. Inter-cable area calls are free

3. Reduced cost on international calls

4. Reduced costs on DTAG and mobile calls.

Through legislation, the enterprise must insure that DTAG is withheld from offering predatory pricing. In addition, the enterprise should approach the Bundestag for telephone tariff legislation allowing it to charge more money to carriers who connect to it to complete calls, than it pays to carriers to complete it's calls. The EU precedent for this has already been set in Belguim.

Much of the infrastructure needed for Telephony is also needed for Broadband Data and VOD, hence costs can be amortized across systems. The enterprise should also study whether call centers, help desks, etc. would subscribe to an outsourced call routing system comparable to commercial ACRs with queues. Telephony options (through technology) can then be offered to business consumers and used as a profit center.

The technology needed for this is conventional telephony (SS7, SPDs, etc.) for DTAG and other pure POTS type of carriers, and VOIP in order to take advantage of the lower costs offered by this technology. The technology for POTS and VOIP operations is reliable, cost effective and widely known outside of Germany.

Extraordinary costs entailed would be for marketing, consumer awareness, consumer education and sales. Bundling this product with cable tv, and using existing cable consumer notification processes would somewhat lower customer acquisition costs.