Bringing The Three Screens To Life

Accenture Communications & High Tech Solutions

Bringing the Three Screens to Life A vision for high performance in a convergent world We live in a three-screen world—interacting with our televisions, computers and mobile devices—and consumers will increasingly expect content to flow seamlessly across all three. A host of technology and business hurdles stand in the way of realizing that vision however, and players across the digital ecosystem will be vying to solve those challenges as quickly as possible to seize the lucrative "first screen" to the consumer—whichever screen provides a person's dominant entry point into the digital world.

Mobile providers and device manu-facturers stand in a particularly influential position, as one thing cannot be disputed: consumers probably do not have their TVs with them all the time; they may or may not have their computers with them; but they probably do have their mobile phones close at hand. If wireless providers can solve the technical, business and operational challenges ahead, they have a chance to thrive in a three-screen world.

Bringing the three screens to life requires a compelling vision of what high performance looks like. And it also requires a clear roadmap that can make achieving high performance a realistic possibility. One of the more compelling visions of how consumers are likely to access digital media, entertainment and communications in the future was demonstrated in a recent television commercial from AT&T as part of its "three screens" advertising campaign. In the ad, a camera pans across crowded rooms both in homes and in pubs, showing different groups of people watching a live American football game simultaneously on a large television screen, a laptop computer and a mobile phone. "Three screens— wireless, broadband and TV—are coming together," says the voiceover. Yes, the advertisement takes some liberties with reality (at least current reality), but it does an admirable job of bringing an important idea to life: the ability to watch video or access other digital content, and personal account information seamlessly as we move from home to work to car and then out for an evening's entertainment. Unlike some futuristic visions, the idea of seamless delivery of content across the three most popular consumer media devices is not entirely farfetched. Indeed, it's a strategy that communications, hightech and media companies (AT&T among them) are actively pursuing in an age of convergence. Actually delivering that seamless consumer experience across three screens, however, involves expertise and innovation across a number of domains that sound less exciting, but are the essential building blocks of an end-to-end service creation and

delivery environment. These include service delivery platforms, network architectures, service quality management, digital rights management, customer analytics, handset testing, fault management and a host of other technology and business process components that have to be in place before a football is actually going to fly across a TV to a PC and a mobile phone. Bringing the three screens to life requires a compelling vision of what high performance looks like in the digital age. And it also requires a clear roadmap that can make achieving high performance a realistic possibility. A number of important consumer and technology changes are occurring across the consumption, distribution and production of video and other digital content that every industry player needs to be aware of.

Consumer trends First, consumers are realizing that they can have much greater control and choice over what media content they can access, as well as when and where they access it. They are also beginning to grow accustomed to the possibilities of the Web 2.0 world—creating and sharing their own content in addition to accessing someone else's. Second, several new methods of distributing digital content, especially video, are gaining mainstream acceptance. Third, video producers are responding to and shaping these trends by adapting their production and creative processes to deal with the threats and opportunities posed by these new technologies and social trends. Looking first at consumer trends, the media and entertainment world is rapidly moving away from the traditional idea that TV schedules dictate viewing times and behaviors. Already, studies have shown that less than ten percent of TV content is actually watched at the moment it's being broadcast by a network. Digital Video Recorders (DVRs) such as TiVo and some of the newer HDTV recorders

2 Accenture Communications & High Tech Solutions

have dramatically altered consumer habits and expectations, giving them more control over when and how they watch video. The next phase of this trend is likely to be video-on-demand, with large libraries of video stored on the network. Time-independence will then be augmented by locationindependence. Offerings such as Slingbox already let consumers watch television, including their DVR programming, anywhere from a compatible computer or mobile phone equipped with an Internet connection. Accenture research has shown that consumers are ready for these innovations. The Accenture Digital Home Global Consumer Study found, for example, that 69 percent of those polled want to download and watch video on their TV; an almost identical number (68 percent) indicated interest in downloading and watching video over the Internet, with 38 percent having already done so. Locationindependence and mobility are also capabilities they're interested in: 51 percent want to watch local TV when they are away from home, and 40 percent are interested in watching video on their cell phones. The move to user-generated content is another important consumer trend. Creating and sharing photos was the first phase of this trend and now, with better cameras and production equipment, video distribution by consumers is also growing rapidly. These videos are finding their way to other areas of the Internet through mashups and other sites, and they're also making their way to mobile phones.

Distribution trends The first thing to note with regard to distribution is that the Internet has become faster and more reliable, so using it as a means of distributing video has finally become feasible. Improvements in the basic network infrastructure have allowed the telecommunications companies to enter the video market; today, most

telcos have some sort of IPTV offering either launched or in an advanced development stage. Other companies are springing up that make use of the Internet connections provided by the telcos to provide video "over the top" of these connections, as the industry phrase has it. CinemaNow and Movielink, for example, offer downloadable movies, TV shows and other video for rent or purchase. A range of other media owners and broadcasters are also using this new medium to complement their existing distribution channels. At the same time, an increasing number of 3G and 4G broadband deployments, and technologies such as Digital Video Broadcasting-Handheld (DVB-H), are enabling video distribution to mobile handsets. As the mobile devices increase in processing power and improve their screen resolution, mobile video is poised to become a force in the marketplace.

Business and market trends From a business point of view, the move by telcos and other companies into the world of three-screen digital content is part of a broader strategy to diversify and grow new revenue streams. Offering compelling content independent of location or particular device is a means of generating growth through additional services— either directly from customer revenues or from associated advertising income. Frankly, one reason for creating a compelling marketing and television advertising campaign is to let consumers see the possibilities of the threescreens world, and give them an impetus to purchase higher-speed, higher-cost broadband speeds and wireless packages. The possibility of using a three-screen strategy to reduce customer churn and increase retention is also an increasingly important part of the overall business case for development. If one can provide an attractive bundle of services at the right price across the three primary consumer devices, and

deliver a high-quality experience across all three, a company has the chance to lock that customer in for a longer period, either through creating a positive reason to stay or by presenting a disagreeable impediment to bolting to a competitor. From a competitive point of view, the telcos moving into the three-screen space are doing so to recapture the value of their "pipes" that is being siphoned away by the over-the-top companies—the media and Internet players using the telco networks. The "dumb pipes" problem, as it is sometimes called, may sometimes be overstated. In a recent interview with Accenture, Atish Gude, senior vice president for Sprint Nextel’s WiMAX business operations, noted that the idea of dumb access “was invented by people sitting in Silicon Valley who were jealous that they didn’t have the access." Companies like Sprint Nextel actually make a lot of money on that access, Gude says. "There are a lot of companies coming to us now saying, ‘Can I have your location information? Can I have security? Can I have your device management? Can you bill on that?’ Now we don’t look so dumb. And, by the way, there’s a charge for those services.” The traditional telcos have a lot of advantages in the three-screen world, after all. They have the networks, the billing systems, the customer care infrastructure, and so on, that will continue to make them a formidable force. Nevertheless, wireless and wireline companies alike need to be thinking about multiple kinds of revenue models if they are to sustain high performance in the long term. As we noted, transforming the vision of three screens into reality presents some formidable challenges. The following are perhaps the most critical of these potential obstacles.

Technology and integration challenges The technology components that make a three-screen strategy work are not only new and often unproven, but also come from multiple providers. The middleware products to support complex video solutions are relatively immature and unstable. That makes integration of these technologies into an end-to-end solution highly complex. Content acquisition and distribution is another obstacle. The workflows for content ingestion, transcoding and distribution are difficult, and considerable debate is currently taking place over what codecs to use for content encoding. Many of the codecs are proprietary, which can alter any given technology solution significantly. Most digital rights management (DRM) solutions are also proprietary, so picking the rights one that supports a company's business requirements at the right price point is often a complex matter. A significant number of content distribution challenges also exist. The current communications and content environment is generally characterized by extremely inefficient distribution. Companies generally send the same content over the same pipes multiple times. And no effective hierarchical content delivery network has really been devised yet. Creating a stable and scalable video service over a broadband multi-service platform is a big looming issue when it comes to video distribution across multiple screens. The bandwidth and quality of service needed for real-time distribution of content across the three screens also lag in terms of maturity and stability. So even where the pipes themselves are big enough, the quality of service capabilities may not be able to support streaming video. One of the cardinal rules of video distribution is that the quality perceived by a consumer has to at least equal a traditional viewing experience. But that is a huge challenge. All the network and service

Bringing the Three Screens to Life 3

control issues required for quality of service and bandwidth control between the different services over the same broadband access requires significant engineering know-how as well as understanding of multiple broadband services and their characteristics. The architecture that enables the video service must also be stable over the access network and home access gateway using IP. This is not a trivial matter; design of such an architecture requires unique understanding of video as well as broadband. An industry issue that compounds the quality of service problem is peer-to-peer networking, which eats up bandwidth and crowds out other Internet applications. The issue of technology standards arises when you're talking about moving content to multiple screens and devices. And content rendering becomes a real challenge given the proliferation of mobile devices. It's difficult right now to port a rich media client to figure out the right rendering on multiple screens. Finally, in an era where you have a proliferation of both professionally produced media and user-generated content, the industry will need very robust search engines to help users find the content they really want. The field of "metadata management," therefore, is going to grow in importance—the categories by which content is organized, stored and retrieved. Some sort of standardization of metadata will be necessary, and that includes not only content metadata, but community metadata as well. That is, there may be 15,000 hits for a video search, but how many are appropriate for an 8-year-old child? All these details need to be worked out before consumers will have a sufficient degree of trust and confidence in the three-screen distribution channel.

Operational challenges From an operational perspective, the threescreen world will present challenges in several areas. Equipping a field force for more complex installation and repair calls, for example,

will be important, as will areas such as configuration management—everything from providing the organizations, processes and systems to managing the home network that is critical for the distribution of that content within the home. Training and supporting a customer contact staff to deal with new threescreen products and services will also be an obstacle. Ordering, provisioning and service will be more difficult for companies used primarily to broadband and voice services. With many video implementations today we're already seeing quite a bit of ordering fallout. If companies want to avoid customer experience problems, they need to streamline their service fulfillment processes. And if they are to avoid revenue leakage, they need to increase their ability to deal with much more complex billing relationships in an environment where multiple parties come together to create a single consumer service. The challenges to successfully bringing the three screens to life are multiple and, therefore, so are the solutions. But here are some of the most important considerations when thinking about driving high performance in a convergent era through delivering compelling services across the most popular consumer devices.

Capture the first screen Mobile service providers and device manufacturers have a distinct opportunity to seize the "first screen" advantage—the screen that a consumer feels is the primary portal into the digital world. Consider the fact that, on average, users spend a higher percentage of time with an “always on“ mobile phone than they do with a computer or television. Capturing the first screen—that is, making the use of a mobile phone a habit when it comes to accessing the Internet and data services—is an effective way to make money through usage as well as through advertising. Today it is increasingly important

4 Accenture Communications & High Tech Solutions

to create business models based on usage, not number of users. No one is going to own the entire user base any more. But if you can be the dominant screen, you will drive increased use of data services. So competitive advantage must be built on the innovative services that drive higher usage from consumers.

Enable more collaborative and faster service innovation and delivery The complexity of the three-screen environment means that no single service provider can provide, on its own, all the capabilities needed to drive high performance. Although the industry is witnessing a massive landgrab at the moment, with revenue sharing between players in the value chain remaining a huge issue, successful players will be those that can develop the right long term partnerships and collaborative tools. Such collaboration will create a foundation on which to build a digital ecosystem. Companies must take a broader and more integrated approach to newservice development, one based on a standardized or "factory" environment. Just as factories and assembly lines in the industrial era transformed manufacturing into a more predictable, cheaper and less financially risky operation, a factory approach can create an environment for more effective service innovation, development and operations in the IP era. More effective service delivery platforms are one critical piece of the overall solution for a service factory. Yet other pieces are equally important: using a mix of dedicated offshore and onshore resources to help take new services from ideas through launch more cost effectively; building upon pre-built services from a proven catalog; creating a more effective capability for third-party collaboration; and using a hosted capability to support more effective and efficient management and optimization of services over time.

Adapt your service delivery platform to a Web 2.0 environment

Think "service quality management," not "fault management"

A three-screen delivery environment has outpaced the ability of traditional service delivery platforms to keep up. As services involve increasing numbers of third parties working together, and as the platforms cross devices and technology infrastructures, service delivery platforms must evolve accordingly.

In the pursuit of providing a quality service experience to customers, the mentality of most operators has traditionally been on fault management— the detection and correction of malfunctions in the network. But several leading companies such as Telecom Italia have been successful in taking fault management to the next level and developing more of a service quality management mentality.

With what Accenture calls, "SDP 2.0" capabilities, a service delivery platform continues to provide its traditional value—support for dynamic, flexible creation of end-user services that run over networks, consistent provision of services to end-users and the controls over the execution of those services to make them cost effective. To those basic services, however, SDP 2.0 adds vital new capabilities such as onboarding, unified user information, flexible policy management, full service management and control, and open service creation environment. It also enables things such as mashups, mobile widgets, application presence, network presence, location-based services and so forth. Other critical supporting features of SDP 2.0 are: • Third-party gateway, to expose Web services to the community of developers in a secure and policycontrolled way. • Third-party on-boarding capabilities, to manage the service creation process and operations. • Service enabler exposure to expand the 2.0 partner ecosystem, enabling the mashup of network-specific capabilities such as location and presence with other services from multiple external providers. • Support for the end-to-end process: qualification, on-boarding, validation and deployment of final users. • Support for different operating and business models with third parties.

Service quality management builds on existing network fault management and alarms to provide things such as rootcause analysis and determination of impact on services. It also should include a robust trouble management infrastructure that enables a provider to comprehensively track network outages, report on their nature and impact, and then restore services. Trouble management capabilities should also enable proper dispatch and workforce alignment to the company’s operational issues.

Develop a powerful customer portal to improve the customer experience Essential to creating differentiated and customer-centric capabilities is the customer portal—multi-channel applications that enable the creation, sharing and distribution of personalized content, as well as access to self-service capabilities. Portals provide broad functionality for success in the Web 2.0 world, where customers use web functionality to participate in social networks, create and share content, and receive personalized services, in addition to traditional communications services based on fixed-mobile convergence. Service providers must deliver a seamless experience to customers accessing services from any deviceoriented portal—a PC, an IPTV-enabled television or mobile phone. We believe that carriers, especially mobile carriers, must create a two-fold portal strategy:

combining so-called “in-portal” and “off-portal” propositions to access content and communications services. Inportal propositions grant users access to dedicated content and communications services controlled by the carrier—delivered through the “idle screen” or the first screen a user sees on a mobile device. The offportal proposition simply opens up the gates to the outside world of the Internet, where control of what a customer does or buys would instead be shared by service providers who provide access to final services such as Amazon, Google and You Tube.

Develop capabilities for integrated, end-to-end device and service testing To deliver a superior customer experience given the proliferation of the numbers and types of mobile handsets, wireless service providers must ensure the new devices operate flawlessly both before shipment and after delivery. But routine test coverage and drive testing is not enough with these multimedia phones. The advanced operating systems and applications require wireless service providers to perform even more test cases, with a limited set of internal resources. Adding to the difficulty, after shipping the multimedia handsets, wireless service providers are finding the devices generate more handset software and firmware errors. According to Accenture analysis, newly released devices suffer from an average 30 percent fault rate. Software faults already have caused wireless service providers to recall thousands of phones. These multimedia handset errors lead to more in-bound customer calls and more customer care time spent resolving issues. Combined, all of these activities are driving up operational costs for wireless service providers.

Bringing the Three Screens to Life 5

Testing services available today, such as the service available from Accenture, can: • Increase the efficiency of evaluating handset requirements • Industrialize the handset testing process using a rigorous and repeatable approach • Assign end-to-end responsibility of handset requirements and testing to one entity • Realign a wireless service provider’s organization to efficiently handle multiple testing requests. The idea of location-independent and time-independent access to rich media content across multiple consumer screens and devices is an attractive one. Creating a vision of that future world is important, but it's also important to keep pushing beyond the rhetoric. Many companies may talk about threescreen, integrated bundles when, in fact, they are not doing much other than offering a discount for a triple-play bundle. Bringing the three screens to life means much more than offering a discount. What's important is demonstrating an innovative mindset that can drive the creation of new services that link the three screens together and create new revenuegenerating opportunities. Telcos have the opportunity to use their network infrastructure and customer knowledge to create compelling services that can revolutionize the way people live, the way they work and the way they access information and entertainment. The winners in the three-screen world will be those with the right mix of both technological acumen and customer insight capabilities.

Copyright © 2008 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

Technical prowess, combined with effective operational skills, can help deliver compelling services that consumers want to buy. But then, the companies that retain those customers and keep driving high performance will be those with the ability to adapt as their customers adapt, continuously building on what they know about their customers and anticipating innovations at every new level.

About Accenture Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With more than 175,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007. Its home page is www.accenture.com.

Contact Us For more information about how Accenture's distinctive solutions and services can help you achieve high performance by creating, developing, delivering and managing innovative services more efficiently and effectively, contact: Emmanuel Lalloz +33 6 32 56 10 61 or [email protected]