Michael Parsons
How big is your bill for digital services at home? If you add up things like satellite television, cable, landline telephony, mobile phones and broadband, it starts to become quite a big slice of your domestic budget. Ofcom tracks this figure, and found that from 2000 to 2004, the average household spend went from around £60 to around £80 a month. If you can't live without a glitzy high-end satellite package, you could be spending £60 a month on TV alone, so it's likely this number has crept up even more since then. Suddenly we're all chief technology officers, managing a small IT division from our sofa. Now that we've got the gig, how are we going to make it easier?
One answer might be to simply buy all the services from one supplier. Economies of scale and the move to standard Internet protocols mean that it makes sense to start joining up the disparate communications and entertainment services that come into our homes. I'm a typical UK consumer: I have a Telewest cable connection, a BT phone line, an Orange mobile phone, a Freeview box and a Telewest broadband connection. I've also been toying with the idea of getting a Sky dish, but can't bear it because it feels too vulgar to stick one on my house (sorry Rupert). This setup means that I need to deal with a phone company, a cable company, a mobile phone company and a satellite television provider and I get umpteen bills from all these different suppliers. I'm sure I could get more and spend less if there was some way to buy an integrated package from a single vendor.
This nirvana of totally integrated communications and entertainment services is now in the business as the triple play -- landline, broadband and mobile services from one supplier. Throw in television as well and you have the quadruple play (Richard Branson, who knows a thing or two about marketing, call it "four play".) Of course to make it work, each vendor would have to offer everything, which would mean huge shifts in the way the market is organised. There's a particular nasty precedent for this sort of huge market shift: energy deregulation. What if one supplier could meet all my energy needs? Well, we know what. Deregulation in the energy supply market is such a joke it's become the stuff of sitcom. It's now hard to work out whether your gas company is providing your electricity or your electricity company is providing your gas (no one seems to be providing the water anymore).
The energy companies went nuts in redefining their corporate structures and have lost decades of trusted connections with their consumers. I have several friends who have simply fallen off the grid and are receiving one or two utilities completely free because they can't find anyone to pay (well, that's their excuse). The horrible confusion created by energy deregulation is a nice example of getting the balance between the innovation and security we want from a supplier completely and utterly wrong. I honestly can't tell you the names of the brands of energy suppliers I use, let alone how I feel about them. TXGen? PowerBill? EDgis?
I don't want my phone company to bombard me with new offers and new technologies every week, as well as spending millions on redesigning its stationery to reflect the latest twist and turn in its corporate identity. On the other hand, I want to feel as though I'm getting a modern, sophisticated service and that I'm not missing out on some cool new features that my neighbour might have.
BT's recent broadband announcements were a step to address this balance of innovation and trust by wrapping up these services with a big white bow to give me simplified billing and one person to call if all goes wrong. Orange is making similar noises, its chief executive saying that it will become "a one-stop shop for all the consumer's communications needs". This is tempting, but there's still a part of me that likes the idea of building up my own best-of-breed set of services and picking and choosing between them.
For one thing, it feels safer. The switching costs of changing any one individual service is relatively low, as the mobile phone companies know only too well. My ability to drop Orange like a hot poker and switch to another carrier is what keeps Orange honest, my bills down and those spiffy new handsets appearing when it comes around to upgrade time. If I stop flirting with multiple vendors and get married to one supplier, my switching costs will shoot up: firing my vendor will mean disruption to all these services until the new vendor is in place. It will feel more like my relationship with my high street bank, in which fear, apathy and inertia mean that it would take a heinous breach of customer service to get me to actually switch to a new bank.
Yet if you follow the logic through there are all sorts of cool things that become possible if there's one smart vendor hooking up your home -- sending TV programmes I missed at home through my Slingbox so I can watch them on my portable device on the way home, sending me an SMS when a family member's phone walks through the door, and so on. And I am taken with the idea of the mobile becoming my primary phone. At the moment I often find myself getting my mobile and looking up a number to tap out on my DECT phone at home: the database integration required to keep my mobile's address book, my wife's mobile's address book and the address book on the impossible-to-programme DECT phone synchronised is beyond us.
It's not entirely clear to me as yet who this process of convergence will ultimately serve. Are we going to get sold a load of stuff we don't need because it suits the business models of the suppliers, as we have in energy deregulation? Or is the alternative to play musical chairs with vendors who are struggling to keep churn down, constantly shaving their margins and never getting the infrastructure investment we would need to see really cool new services? Something tells me that whether it's a triple or a quadruple play, someone is still getting played. I just hope it doesn't turn out to be us.
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