Catalyst 2017 was the year operators reassessed their place in the value chain. Operators are realizing they can't invest, or out-innovate over-the-top players, in all things. 2018 will be an extension of that. Competition and market saturation will be the main pressure points. Operators therefore need to know what services their customers' value, as well as factor in where new growth will come from (e.g., millennials). They need to be even more vigilant around bundling and pricing for new growth while keeping existing customers happy as tastes evolve toward perceived higher-value services, such as OTT TV. Ovum view Operators by now should understand their place in the value chain, realizing whether they are an AT&T that can buy Time Warner or a Softbank that can buy a stake in Uber Technologies. But we would argue that operators still have a lot of investigation to do around really knowing their user base. The new digital consumer is upon us, more discerning than ever, valuing new services (e.g., OTT video, a mobile service) over legacy services (e.g., fixed voice, pay TV). The onus for operators is to keep abreast of these changing digital consumer tastes. First, that means they need to keep existing customers happy, renewing their multiplay services or enticing them with higher speeds or more value-added services. This is particularly the case in developed markets where fixed broadband penetration has reached saturation - in this case, a key trigger for customer nonrenewal is "how relevant is the bundle I have?" Second - and this is where a lot of operators are failing - they need to consider where the new growth opportunities will come from. Today's millennials are unlikely to value full-blown large and expensive pay-TV services in their multiplay packages. In turn, operators need to segment to attract this customer group to help maintain growth. In short, it is about bundling relevant services for new use groups and even grasping the new reality: the rise of the mobile-only broadband and video consumer. Key messages 1. "Bundle shavers" need addressing in 2018. Consumers are reassessing the value of their multiplay, and that means more focus on having OTT video and a mobile service in the bundled offer. Bundle shavers, who are looking for cheaper, more relevant bundles, will need to be particularly monitored in 2018 as they could be prime churn candidates. Ovum forecasts next-gen bundled subscriptions that include valued services such as Netflix or a mobile service in the multiplay will make up 25% of bundled subscribers by the end of 2018. 2. Get ready for the mobile-only broadband and video consumer. The "anchor app" for consumer broadband is video, and as technical capabilities of fixed and 4.5G mobile converge, the mobile-only customer becomes a more distinct user group for video and broadband. Mobile operators are already increasing data allowances and speeds, making the consumption of light OTT video more realistic and palatable over mobile. 3. Segmentation opportunity will be lost without price innovation. Tariff innovation will be required to milk the new customer segmentation reality. In the fixed broadband space, we expect higher-speed tiers being offered at minimal premiums for the majority, but also more low-speed, low-cost, prepaid, and no-contract offers for low-credit, rural, and hitherto unserved customers to emerge in 2018.
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