By Arthur Middleton Hughes, KnowledgeBase Marketing,

It will take telecoms operators a long time to recoup subscriber acquisition costs for TV services; competition for customers will be fierce.
Lifetime value has become one of the most widely used methods of determining the value of telecoms subscribers – and hence of selecting the appropriate marketing strategy to be used to acquire and retain them.

To show how it can be used, let's try to answer a simple question: how much will adding TV increase telco subscriber lifetime value? To answer this, let's look at lifetime value (LTV) before and after TV is installed. We can begin with a typical landline subscriber lifetime value table of subscribers who have both a landline and broadband using DSL.

All industries suffer from voluntary churn — the loss of customers to some other company. But some get hit worse than others.

Take the telecommunications business.

Annual churn rates for mobile telecom companies average between 10% and 67%. The rate depends on the firm and whether the subscriber has a postpaid contract or prepays the service. At the low end is Verizon Wireless, with about 10% of its contract customers leaving annually.

Worse, roughly 75% of the 17 million to 20 million subscribers signing up with a new wireless carrier every year are coming from another provider and, hence, are already churners. It costs hundreds of dollars for a company to acquire a new customer. When that person leaves, you lose the future revenue — and the money spent on the acquisition.

Telephone companies and cable TV companies (Telecoms) have been offering consumers what they call The Triple Play of phone service, broadband and TV (including movies on demand). The cable companies started it by offering broadband, and later phone service. The Telcos fired back by offering DSL broadband, and most recently by offering a full range of TV and movies. As a result, a small number, and eventually most of the consumers in America will have the option of getting these three services from at least two competing companies.

Click here to contiune reading....

Excel Charts from the book Customer Churn Reduction and Retention for Telecoms by Arthur Middleton Hughes

Many leaders of phone and cable TV companies have said that the “triple play” is essential to successful customer acquisition and retention today. By the triple play, they mean that the same company offers and sells telephone, Internet broadband, and video-TV to its customers.

Click here to read the full article (PDF Format).

Cable companies are in the fight of their lives. They have cable running alongside 99% of the TV homes of America, and the Telcos are far behind. But not for long. Telcos are laying fiber and installing VDSL2+ to millions of consumers' homes to bring them high-speed broadband and TV channels.

Click here to read the full article (PDF Format).

Phone and Broadband as Commodities

By Arthur Middleton Hughes

Landline phone and broadband services could soon become commodities. The prospect does not spell good news for cable TV and phone companies. 

A commodity is defined as a product or resource that is traded primarily on the basis of price, and not on differences in quality or features. When a product or service becomes a commodity, in the long run, the market price of such a commodity will fall to the marginal cost of the lowest cost volume producer. 

Broadband as a commodity

Churn reduction in the telecom industry

By Arthur Middleton Hughes

All industries suffer from voluntary churn -- the loss of customers to some other company. The survival of any business is based on its ability to retain customers. This is particularly true for phone, cable TV, satellite TV and wireless companies. How do you reduce churn? There are many ways: better products, better delivery methods, lower prices, building satisfactory customer relationships, better marketing and, above all, successful customer communications. 

AT&T and Verizon are losing 3 percent to 5 percent of their landline customers every year.

In 2005 Verizon had 50.7 million business and residential phone lines -- plain old telephone service or POTS -- down 5.5 percent from the same time in 2004. Where are these customers going? Some people with cell phones are discontinuing their land line phones. Others are going to telephone service provided by cable companies like Comcast. Still others are shifting to Vonage or Skype. Is this a problem for the phone companies?

The situation is not as bad as you might think.

Click here to read the full article (PDF Format).

VoIP is sweeping the planet. For those who do not know it yet, VoIP stands for Voice over Internet Protocol. It is a method whereby users anywhere in the world can call anyone else over the Internet for almost nothing. Despite its low cost, annual U.S. VoIP revenues exceeded $1 billion in 2005, according to a report from TeleGeography Research. The firm said it expects U.S. VoIP subscribers to jump to 9.6 million by the start of 2007. While this sounds big, US VoIP revenues in 2006 will represent only 7 percent of the combined revenues of traditional local and long distance service providers. Of the total VoIP revenue, more than half of it comes from cable operators.