A nationwide phenomenon
Apr 17th 2008 by Allen Voivod under Service Providers
I’m in California for three weeks, and clicking through the channels on the TV in our rented townhouse, I saw an ad for Time Warner Cable’s “All the Best” triple play package, with these three benefits called out right up front:
- One package.
- One simple bill.
- One low price.
This is exactly the same value proposition being offered by MetroCast, the small regional MSO serving more than 100 communities in New Hampshire (my home state), Pennsylvania, Maryland, Virginia, Connecticut and Maine. Here’s the benefit statement for MetroCast’s “VIP Package” (for Video, Internet, and Phone):
Video, Internet and Phone—all under one roof: Yours. Enjoy the convenience of three great services on one bill, from one company.
That nationwide phenomenon I mentioned in the headline of this post? It’s commoditization. At the B2C level, both companies are saying the exact same thing, and if they were competing in the same market, the only differentiating factor would be the brand reputation of TWC parent Time Warner.
The ever-helpful Wikipedia adds another wrinkle to the issue:
Today, triple play services are offered by cable television operators as well as by telecommunication operators. It paves the way for these service providers to compete with one another. It relies on the assumption that an integrated solution will increase opportunity costs for customers who may want to choose between service providers. Interoperability is not a design target.
That’s a pretty dangerous assumption. It reminds me of wireless carriers in the pre-number-portability days. Look at Verizon Wireless now. They unapologetically refuse to compete on price, because “It’s the Network.” They’re succeeding because they’ve positioned themselves based on one of the biggest pain points for cell phone users - network coverage. (Once AT&T catches up reputation-wise in that area, though, all bets are off.)
When you commoditize your service and compete only on price, you start from a place of zero loyalty with your customers. It doesn’t take much to create a stagnant customer base willing to jump if you annoy them enough. And the annoyance threshold is a lot lower without that whole loyalty thing, regardless of the alleged “opportunity cost.”
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