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The Business of Broadband: Layers of Revenue, Part-3
This is the third and last article in the Layers of Revenue Series introducing to you my concept of how an ISP should organize their value proposition to the customer.
This is the third and last article in the Layers of Revenue Series introducing to you my concept of how an ISP should organize their value proposition to the customer. Last week we got to the “meat” of the matter and discussed the various value-added services (layer-2 in my model) that an ISP can offer a broadband customer in order to improve performance of Internet applications and the growing amount of content out there.
We discussed how these value-added services can provide three key things for the broadband ISP model: 1) allow the ISP to up-sell the consumer on additional offerings, 2) Allow the ISP to function independently of the constantly changing world of new content and applications and, 3) differentiate themselves from broadband services provided by the traditional Telco or Cable provider.
Now let’s look at how we could position our new service offerings on the consumer broadband market and offer the different “tiers” of service. Let’s begin by looking at our competition in the residential market in North America. The average Cable operator offers broadband service for a flat fee of $45 per month. This gets you 4Mbps of bandwidth, on a good day when the local network is not used very much.
Let’s now look at our new WiMAX ISP’s offering that uses a content-driven approach to pricing. Here is an example pricing model that could be offered to your customers and a way to communicate the various services to the consumer:
1. Basic Internet Connectivity:
Basic service (1.5Mbps): $19.95
- Good for web browsing, email etc.
Premium service (5Mbps): $39.95
- Good for music downloads and basic lower resolution video.
2. Additional Services (added to the premium service):
Telephony package: $9.95/month
- Optimized performance for a telephony provider of your choice.
- For best results we recommend Skype (free) or Vonage (special discounts available).
- Optimized for clear calls to landlines.
High-Def Video Package: $19.95/month
- Optimized performance for streaming and downloading video content of your choice.
- For best results we recommend Akimbo Systems or NetCast-HD.
- (you could offer many other products under this category, like Media Center PC’s, IPTV hardware and services etc, all providing additional revenue streams).
Security monitoring package: $9.95/month
- Optimized service for in-home security systems, camera feed uploads etc.
- Provides higher upload speeds for better camera performance when monitoring your home over the internet.
These are just examples of some of the services that could be offered as up-sell services to the consumer, there are many others that can be related to Multiplayer Online Games (MOGS) and others that may require performance tuning from the ISP to work better. Since now all applications and content are running over IP networks, the opportunities for ISP’s are vast and changing all the time as new content is invented.
There is a growing number of applications that require good bandwidth upstream from the consumer to the internet. For example the SlingBox, security cameras, TV placeshifting, home servers etc. This is a huge untapped potential for an ISP! The competition is offering very mediocre upstream performance averaging around 300kbs which seriously degrades the performance of these applications.
The great news for a new and emerging ISP is that it is mainly due to technical reasons. Cable modems can’t provide a faster path upstream to the cable head-end. This is a huge opportunity for broadband providers that do not have this technical limitation and could take advantage of this functionality by marketing it properly!
Next week I will talk about content partnerships and the huge opportunity in internet video and the emerging market of Media Center and Home Theater PC software. It is time to start thinking of taking advantage of the video offerings being announced recently by iTunes, Amazon, Movielink and the like. Make it Happen!
Paul Zukowski
www.zukowski.biz
