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Digital Content within the Telecom Ecosystem

Telecom service providers of all stripes are gearing up for a major push into the digital content sector, which has rapidly emerged as a critical competitive issue affecting the entire telecom supply chain, according to a market study from Heavy Reading.

"Survey results show that service providers are highly optimistic about the roles they will play in the future of entertainment," notes Sterling Perrin, Senior Analyst with Heavy Reading and author of the report. "Respondents to our survey overwhelmingly believe that players with converged wireline and wireless offerings have the most to gain from the digital entertainment evolution -- more than cable and satellite providers and user-generated content players such as YouTube."

Key findings of the study are as follows:

- Service providers are casting a wide net in their plans to make money from content. This reflects the early stage of market development and general uncertainty surrounding what the winning revenue formula will be. Nearly every revenue option presented registered a strong positive response, including (in order of preference) VOD premiums, broadcast content subscriptions, interactivity service premiums, and advertising.

- Telco service providers are surprisingly open-minded about the types of end-user platforms they would consider for content viewing. While cable companies have a vested interest in preserving the TV/STB delivery model, telcos appear more willing and interested in a broader approach, encompassing not only the TV, but also the PC and even mobile devices.

- Network equipment providers will remain highly trusted partners as telecom service providers plot their new media strategies. Equipment vendors topped the list of 'preferred partners' for developing digital entertainment business models and services. Systems integrators and consultants also scored well in partnership ratings.

- Pricing is a major long-term challenge for telco entertainment services, and unique sports content is one possible way to compete beyond price. In the near term, telcos have far more to gain by engaging in price wars than their cable and satellite rivals. Over the long term, however, price competition is a dangerous strategy. Exclusive sports content is an excellent means of gaining loyal subscribers and differentiating from incumbent pay-TV providers.

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