Alcatel-Lucent 7750 SR manual Profitability Factor, Dvr

The Profitability Factor

An improved regulatory environment and the clear potential for incremental revenue have convinced many incumbent service providers to rapidly make considerable investments in new service delivery infrastructures. By adding video, voice and managed data services to their existing high- speed data and Internet service lineups, service providers can improve their competitive position in the market.

All service providers competing in this market are faced with the challenging task of offering a compelling value proposition for their service offerings in order to achieve and maintain a high average revenue per user (ARPU) and to sustain the long-term profitability of their services (see Figure 2).

For service providers who successfully meet this challenge, benefits will include the ability to:

•Successfully sell new, higher value services to their established customer base

•Leverage their brand equity to offer high- margin bundles and minimize churn

•Progressively build their service infrastructures around profitability models, as opposed to network or infrastructure constraints

•Consolidate multiple specialized networks into a cost-optimized and efficient service infrastructure that will achieve economies of scale and maximize the profitability of services

Figure 2 - Projected ARPU for Various Triple-Play Services

ARPU (in U.S. Dollars)

200	HDTV
	DVR

150	VoD
	Premium Video
100	Digital Video
	Basic Video

50		Broadband
		Long Distance
0		Local
	Voice	Voice,
Voice
Only	and Data	Video
		and Data

Source: The Yankee Group, 2004

6 Alcatel-Lucent 7750 Service Router