Attack-Defend-Exploit - KPN's Success

IanFogg | February 08, 2006, 02:56 AM

Over the last few years, KPN has done the unthinkable in broadband access, at least from the perspective of US cable companies: KPN has overtaken the strong entrenched cable players.

KPN's results announcement today highlights the broadband, VoIP, video, mobile and brand challenges ahead.

While KPN's initial strikes against cable caused broadband ARPU to fall, KPN has been remarkably successful in maintaining price points over the last year as it has consolidated its broadband position. To move ahead, KPN must exploit its broadband base more strongly than it has to date.

KPN's video strategy is a little different to other incumbents and is less dependent on broadband. It has been a proponent of Digital Terrestrial TV and hopes to segue into IPTV from this position. As multi-channel cable TV is ubiquitous, KPN needs to do something exciting here to earn major new revenues.

In voice, KPN is the incumbent, and has strong mobile and fixed offerings. Here, cable is on the offensive through VoIP and MVNOs, but KPN's defensive strategy appears sound if unoriginal: grow fixed VoIP and launch a series of fixed-mobile convergence offers leveraging its various fixed ISP brands. The selection of brands -- both ISP and mobile -- provides KPN with more brand flexibility than most large operators.

The cable operators hope to seize back the initiative with VoIP. KPN needs to be more radical in response: 75 percent of the Netherlands' 362,000 VoIP customers connected through cable at the end of 2005 (Source - KPN). The cable players are working on full VoIP interconnection. This should deliver economies of scale and viral effects that will strengthen the value of their VoIP propositions to consumers. KPN's increased marketing and channel distribution for VoIP is a necessary, but not sufficient step, to remain competitive. KPN has to think of VoIP as something more than 'voice version 2' (VV2).