Imagine, for a moment, that you're a "civilian," and not a savvy telecom or media executive. You've finally decided to buy your first mobile phone, so you stroll into your local Best Buy, Circuit City or RadioShack. You've prepared for this purchase by reading the ads, asking friends and maybe even testing some systems at work.
Now you're confronted with a display stand with an array of choices: AT&T Wireless, Sprint PCS, VoiceStream (oops, that's T Mobile now), Verizon, Cingular Wireless and maybe a few more. The shelves are laden with pocket-sized phones that look uncomfortably alike.
The knowledgeable and helpful clerk (who has perhaps worked there for more than four days) starts to explain the dazzling array of pricing plans, service options and connectivity deals — all to help you make this decision and sign a long-term commitment.
Now substitute "broadband modem" for "mobile phone." Even a wise professional like you may be daunted by the retail profusion of cable modems and digital subscriber line devices that are stacked side by side.
NOT READY, YET
That's why the DSL Forum's vision of a "retail strategy" does not yet ring true. ("DSL Industry Nears Retail," Multichannel News, August 19.)
Indeed, in a follow-up conversation, Forum President Bill Rodey and marketing director Laurie Gonzalez emphasized that their retail dream — if it can be implemented — may work better in overseas markets, where the gap between cable-modem and DSL penetration isn't quite so wide.
"We're committed to a mass market for DSL, whatever retail market is rolled out," insisted Gonzalez, the group's only full-time employee.
She said the DSL Forum is now entering its "accelerator phase." But at its "summit" meeting in London last month, the global group did not establish a budget or plans for the retail promotional campaign "to get consumers excited about DSL," as Gonzalez put it.
"Exciting" is a great marketing buzzword, but it hardly applies to the retail scene for either high-speed-data technology.
Actually, the DSL modem situation is virtually invisible. That's because the adolescent Bell companies use slightly different digital subscriber line technologies, which doesn't incent modem makers to create a retail product.
SLOW FOR CABLE, TOO
That's why one goal of the DSL Forum's new "Global Interoperability Testing Plan" (TR-048) is to establish a widespread certification process to assure technical uniformity that might enable DSL carriers and modem makers to begin a retail assault next year.
Meanwhile, the cable-modem retail situation is nothing to brag about, despite the certification and standards work from Cable Television Laboratories Inc. No more than 15 percent of the nearly 9 million U.S. cable-modem households actually bought their devices at retail (i.e. about 1.3 million store sales).
Cable operators erratically support retail efforts, while competing to sell the same devices.
Gartner DataQuest principal analyst Patti Reali cites the "power of the bundle" when referring to cable-system offers of extensive discounts to customers who buy broadband services and a cable modem directly from their operator.
MSOs also offer variable-speed pricing and more sophisticated broadband provisioning that retailers simply cannot match, she added.
DataQuest's latest second-quarter research data indicates that Motorola Inc. — by far the largest cable-modem vendor, in terms of quantities shipped — distributed about 20 percent of its output through retail outlets. Toshiba Corp. sold 17 percent of its cable modems at retail, while Thomson Consumer Electronics's figure was 10 percent.
Other cable-modem makers saw less than that share move through the retail channel, according to Reali.
But that may be changing. Steve Asbell, Cox Communications Inc.'s Atlanta manager of retail channels, believes customers are increasingly shifting toward the stores.
In part, that change is fueled by the competitive offers made by retailers (and the manufacturers behind them). Asbell noted deals that let customers buy cable modems at prices of $89 to $129 — about $10 to $20 less than Cox's pricing for unbundled devices.
In some cases, rebate programs can bring the end cost of a cable modem down to the $29 range.
Of course, cable is aided by its three-year retail head start and the promise of Data Over Cable Service Interface Specification modems that will work anywhere. And the U.S. cable industry's collaborative "Go to Broadband" campaign (also orchestrated by CableLabs) has promoted the high-speed cable service.
Go to Broadband may serve as the prototype for the planned DSL Forum assault.
Which brings us back to the retail-floor confrontation — or confusion — between the competing broadband companies: cable, DSL and (to a small extent, but with powerful retail presence) satellite and mobile providers.
The DSL Forum's retail attack — if it actually materializes — could shake up the existing cable-modem storefront agenda. Most of the major retail chains already have cable deals, usually on a regional basis, with MSOs active in specific territories. But many stores also have kiosks or other tools to help customers identify DSL options.
With competitive broadband offerings, customers may be more tempted — and also more leery — of checking out retail options. That's where a new breed of "broadband middlemen" may be useful to sort out customer choices.
Companies such as DigiTerra Broadband provide stores with software and services that let customers identify the broadband carriers that are actually available in their neighborhood. Right now DigiTerra's primary alliances are with AT&T Broadband, Comcast Corp., Cox and EarthLink Inc., but the DSL invasion will make the line-up even more competitive — and add to the complexity of a simple modem sale.
With any luck, it won't be too much worse than buying a phone today.
Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.
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