The Communications Service Provider (CSP) industry is at a crossroads. The number of subscribers to voice and video services has been on a steady decline for several years—and new technologies and increased competition from non-industry players are further eroding those numbers.
The shift in consumer habits
How CSPs can innovate to meet customer demand in a cord-cutting world
Not only are consumers cutting the cord en masse, but they also have more choices for smart home features. That’s compelling them to look for new services and features that add convenience and simplicity to their lives.
These consumer behaviors have been disrupting the industry for some time. But the pandemic has accelerated the adoption of digital video streaming and smart devices, and those trends are expected to remain.
To compete in this new world, CSPs can no longer rely on their traditional business models. They need to be more agile, rethink the customer experience, and innovate to find alternative revenue sources. Digital transformation is long overdue for the industry—and technology like cloud computing holds tremendous power for CSPs that want to implement alternative solutions.
+1/3
More than a third of US households will have stopped paying for TV subscriptions by 2024
85%
Video streaming apps installed on mobile devices grew by an estimated 85% in the last two years
68%
OTT content has a 68% reach among households with WiFi, according to Comscore's June 2020 report
The cord-cutting phenomenon has been gaining momentum for several years, and eMarketer estimates that an aggregate of more than a third of US households will have stopped paying for TV subscriptions by 2024. The biggest driver is the abundance of over-the-top (OTT) content that consumers can easily access both over their TV screens and on their mobile devices.
OTT content has a great value proposition for consumers, not only in its price model but also in the multitude of choices and its convenience. The proliferation of mobile devices that can stream content means customers can enjoy their entertainment anywhere rather than being tethered to their TVs. Case in point: The number of video streaming apps installed on mobile devices grew by an estimated 85% in the last two years in the US and 60% in the UK.
Improved access to higher internet speeds is also having an impact on OTT growth. In the US, OTT content has a 68% reach among households with WiFi, according to Comscore's June 2020 “The State of OTT“ report.
Many CSPs are paying attention. They're looking for new ways to entice would-be cord-cutters. For example, Verizon introduced “Mix & Match“ packages that removed the customary long-term contracts and added more customization for TV channels. While these kinds of small steps are a move in the right direction, they're not disruptive enough to sustain CSPs for the long term.
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The rise of the smart home
Another growing consumer trend is the smart home. In 2020, smart home device shipments reached 801.5 million units globally, and the number is estimated to grow past 1.4 billion in 2025.
The rise of the smart home goes far beyond the rapid adoption of smart speakers and smart TVs. Devices ranging from connected doorbells and lighting controls, to connected appliances and even furnishings, are taking over the home.
This presents two types of opportunities for CSPs. One is the delivery of add-on smart home services such as home security, and the other is intelligent WiFi management that improves the quality of service for the increasingly congested home WiFi network.
Estimated growth of smart home devices in 2025
1.4
billion
Smart home device shipments globally in 2020
801.5
million
Competition heats up
The shift in consumer habits is converging with another shift in the industry: CSPs are not competing only with their peers now. Valued at $101.42 billion in 2020, the OTT market is projected to more than double that by 2026. Both OTT and technology giants have entered this market.
These new players are nimble and innovative. Many are jumping on the bandwagon of becoming fully fledged media companies rather than just viewing platforms, producing original content that competes directly with traditional TV. They're also building their own digital infrastructure, relying less on CSPs.
In response to the market changes, CSPs that are searching for growth are expanding their offerings beyond connectivity and video or audio services. Globally, some leading CSPs receive 20–50 % of their revenues from non-connectivity services, ranging from e-commerce or app creation platforms to utility services. CSPs that are not exploring these types of options are leaving untapped opportunities on the table.
Valued at $101.42 billion in 2020, the OTT market is projected to more than double that by 2026
$101.42 billion
Globally, some leading CSPs receive 20–50 % of their revenues from non-connectivity services
20-50%
What these trends mean for CSPs
As CSPs look to transform, agility and scalability are key. Legacy business models that rely on the traditional delivery of hardware and software solutions cannot support the type of innovation required in a disrupted market. Adoption of technologies such as the cloud is imperative—not only for helping CSPs catch up with the market but also for positioning them for the new waves of innovation.
The cloud is the only way for CSPs to increase the velocity of their growth. Uncoupling hardware from software and implementing new approaches such as software-defined networking (SDN) is how CSPs can boost both agility and scalability.
By moving service delivery to the cloud, CSPs can deploy new services much faster and more efficiently by simply upgrading the software.
Some examples of value-added services that CSPs could offer through a cloud-based service delivery platform include cyber-security for homes and small businesses, parental controls and employee management, and motion detection. By adding a mobile app, CSPs can make the adoption and management of these services easy and convenient for customers, who are already accustomed to managing their smart homes and businesses via their mobile devices.
Value-added services that CSPs could offer through a cloud-based service delivery platform:
Cyber-security for homes and small businesses
Parental controls
Employee management
Motion detection
Innovating with Plume
Plume provides technology-forward CSPs with a new framework that modernizes service delivery. Plume’s Consumer Experience Management (CEM) Platform is a flexible solution that combines highly personalized, front-end services for the consumer with robust, intelligent, data-driven back-end tools for CSPs. Built on artificial intelligence and machine learning, the cloud-deployed software evolves along with the CSP’s customer base.
An interoperable, hardware- and vendor-agnostic platform, the Plume CEM platform enables CSPs to not only quickly roll out services but also improve service quality through intelligent WiFi network management. The platform also powers features such as IoT device management, parental controls, cyber-security, small-business insights, and WiFi motion detection, which CSPs can offer to generate new revenues.
It’s not enough for CSPs to cater to today's consumer demands. They need to be looking ahead as technology continues to change behaviors. In homes powered by Plume, virtual reality devices saw a 223% growth between October 2019 and May 2021. That’s only one example of how new technologies are impacting the home—and the market.
As more consumers realize the value of smarter WiFi and the benefits of a seamlessly connected home, they'll continue to expect and demand more from their service providers. Regardless of where the next big developments take the industry, CSPs need to be ready with agile business models that scale for growth.
223%
In homes powered by Plume, virtual reality devices saw a 223% growth between October 2019 and May 2021
Download the guide for CSPs
Download the guide for CSPs
Download the guide for CSPs
Download the guide for CSPs
Download the guide for CSPs
Download the guide for CSPs