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VAS Will Drive Broadband Revenue Growth

The addition of incremental value-added services (VAS), such as TV-based caller ID and home monitoring, to basic triple-play service bundles in the U.S. will boost monthly revenue per subscriber to $206 by 2010, according to Parks Associates.

By definition, a bundle features any combination of landline voice, wireless voice, high-speed Internet, or television from a single service provider. Current revenue per subscriber from triple-play bundled services is $148 per month.

"The bundled services market is becoming increasingly crowded with service providers, including cable MSOs and telcos, all offering similar combinations to consumers," said Deepa Iyer, research analyst at Parks Associates. "At present, competitors are struggling to differentiate beyond aggressive price cuts and catchy promotions. At the same time, customers place a premium on specific value-added services, so naturally broadband carriers are going to use these features as key competitive differentiators."

While the market for value-added television and high-speed Internet services is in an early stage of development, such services will serve as entry points for providers to create "consumer-centric" user experiences.

The Parks study finds that 31 of broadband consumers intend to add TV-related value-added services to their bundle. Furthermore, 41 percent of broadband consumers are interested in adding supplementary services to their Internet subscriptions as a part of their bundled service package. Parks Associates estimates this interest will intensify in the next five years and these supplemental services will generate $10.7 billion in revenues by 2010.

"An integrated set of services that match consumer interests can transform the so-called commodity services - voice, high-speed data, and TV - into enhanced user experiences," Iyer said. "While simple services like caller ID on a TV or a discounted satellite radio subscription will start the transition to 'My World' user experiences, enhanced value-adds such as home monitoring via the TV or online storage backup solutions for consumer-generated content will augment this new value proposition for consumers."

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