New Zealand holds ambitions for a world-class broadband “autobahn” — a superhighway unconstrained by speed limits. But we’ve studiously ignored the other part of the picture: what are the services that will drive value?
I am not challenging our need for a mid-to-long term fibre roadmap. But I fear we are at risk, once again, of losing sight of the customer. Consumers don’t care about speed tags: the vast majority don’t have a clue about the relative merits of 20Mbit/s vs 100Mbit/s. Their concern is how it will enhance their lives and enable them to do more — simply and cost effectively.
On this point, the silence from the industry is... deafening. Even the early murmurs about IPTV and movies on demand have been muted, due to complexities in licensing rights and the business case.
If ISPs don’t have a long-term broadband services strategy, they risk being left in the dust by fast-moving, consumer-focussed entertainment, internet and commerce companies, without even the chance to clip the revenue ticket.
So what is it that consumers actually want (and will pay for)?
In November 2007, IDC ran a NZ Consumer Lounge survey of 445 consumers, 74% of whom were broadband users. There were some telling results: over 40% of broadband respondents said “lack of interesting content” inhibited internet video-watching, particularly in the 30+ age group. Only 15% cited “speed of connection” as the main barrier. User-generated content was the most popular form of internet video at 80%: followed by music videos at 70%.
Movies, TV, sport and adult entertainment lagged behind, ranging from 40% to 25%. Only 15% of content was paid for.
Video-on-demand as a concept was understood by 89% of respondents. However, 71.5% said they would not be prepared to pay for it, while 26.7% said they would “if it was better than Sky”.
Despite the strong bias towards free content, 35% of respondents were willing to pay for online content via a mix of subscriptions, pay per view and advertising, while 34% believed it should be free, supported by advertising.
In short, New Zealand consumers see a yawning gap in compelling high-bandwidth content. Yes, there is a reluctance to pay for multimedia, founded in the earliest “free-for-all” internet principles. But this won’t evolve if users can’t see great value in what’s available. There is a willingness to consider part user-pays and part advertising-supported models if the value can be proven.
However, the real demand was in enabling services. Users wanted the tools to access, manage and share content across multiple devices: the most popular services were one device to store all content followed by access to a large content database, easy video-conferencing and sharing entertainment between multiple devices (see the accompanying graph).
TV remains a “lean-back” leisure device, with consumers wanting to keep PC utility functions separate. Applications like TV-based gambling, personalised advertising, and interactive shopping were the most unpopular with 50% to 80% registering no interest — even if free. By contrast, streaming of music, entertainment and web content scored highly although “Caller ID on the television” was the most popular.
Video-conferencing has high consumer interest if introduced in the form of easy-to-use video chat or instant messaging.
The long-predicted shift in demand to “internet anywhere, anytime,” is finally becoming a reality. We don’t want a mass-market, shrink-wrapped “walled garden” of content. What we want is the tools to self-select and customise. We place a premium on simplification and control — and we are willing to pay for services that help us to manage connectivity and content.
Above all, we can’t afford to remain locked in circular debates over technology and access.
It is time to change the telco mindset, and begin to think like consumer brands, approaching services from the perspective of what customers truly want — rather than what the technology will deliver.
Nelson is research telecommunications manager at IDC New Zealand