Thomas Kuhn, in his foundational book The Structure of Scientific Revolutions might teach you to look for anomalies in business, not just science. The theory is simple enough: under normal circumstances, knowledge grows incrementally.
When an established paradigm is about to break, people keep running into anomalies–facts that don’t fit the existing paradigm.
We are at the beginning of just such a period, in terms of the dominant retail paradigm for any access provider in the U.S. market, and many other markets. For more than a decade, the triple play has been the key retail strategy in the fixed network access market.
There are several reasons for that reality. Single-purpose networks (the old telephone network, the old cable TV network and others) had a different business model than today’s multi-purpose networks.
In the past, one service, delivered on a purpose-built network, worked when there essentially was no competition, allowing take rates as high as 80 percent to 95 percent.
In an era characterized by multiple-purpose networks that can deliver any popular service (voice, video, data, messaging), no service provider can expect to get penetration rates as high as in the past.
To use a couple of obvious examples, telcos never again will have 90 percent voice share, or cable TV providers 85 percent video share. In a two-provider market, each of those contestants might expect to get about half of whatever market remains.
In other words, each might get as much as 40 percent voice share, and as much as 35 percent video share (assuming satellite gets reasonable share).
Those figures also show the extreme danger of stranded assets: if a network is built to pass 100 percent of homes, but only 40 percent to 50 percent are buyers, half the investment produces zero revenue.
The triple play bundle developed because selling three services to a smaller number of customers still produces as much revenue as selling one service to most homes can generate. Service providers also figured out that bundled service customers do not churn as much.
In recent days, many fixed network Internet service providers (including Google Fiber) have argued that video entertainment is essential to make the fixed network investment work.
Even if Google Fiber does not sell voice, it relies on high speed access and video to make the business case work. Telco and cable TV rely on the triple play.
There are anomalies, however. Netflix and many other streaming video services might indicate the market is at an important inflection point.
And that matters because it threatens to undermine the value of the linear video component of the triple play. That is potentially hugely disruptive.
All ISPs relying on a video-plus-Internet access retail package would face revenue issues if streaming gains traction faster.
Fewer and fewer consumers actually rely on fixed network voice, many continuing to buy largely because doing so allows purchase of other desired services (video and Internet access) at better prices.
And consider what could happen once fifth generation mobile networks go commercial, offering every end user at least a gigabit of Internet bandwidth, and as much as 10 Gbps.
At that point, voice would face huge competition from mobile, video would face over the top streaming and high speed access also would face substitution from mobile high speed data.
That would undermine the economics of the triple play.
The huge issue is what fixed network service providers would do to cope.
In the wake of the Comcast decision not to bid for Time Warner Cable, some suggest Comcast itself must prepare its own over the top streaming service, as it cannot grow through acquiring more fixed network customers and assets.
That also would be hedge against an eventual diminution of the linear video revenue stream. Verizon and AT&T have very different views about the future for linear video. Verizon thinks OTT will destroy the linear business faster, while AT&T thinks the decline will be more gradual. But both can conceive of a future where the strategic product is high speed access.
Those are big anomalies: all three constituent parts of the triple play bundle, are under threat. So the next decade is going to even more thrilling, from a service provider perspective, than the last decade.