One Value Proposition but Two Business Models: quadruple play in the telco & cable TV industry

I find it fascinating to observe how two industries - the telecom & cable business - are increasingly resembling each other though they function with completely different models. This nicely illustrates what I believe is becoming a strong trend and what I will briefly outline in the following lines: Industry frontiers are blurring and the business model is becoming the unit of analysis of choice...

The battle between telecom providers and cable (TV) operators is heating up. Both are converging to a very similar value proposition offering basically the same products & services: telephony, broadband Internet, TV & entertainment and mobile telephony. The media and telecom analysts call this a quadruple play. In other words telcos and cablecos are aiming at offering their customers 4 services out of one hand.

What is interesting about this is not only the convergence of the two industries towards a similar value proposition, but the underlying business design based on different competencies & technologies. For telcos it was quite a natural choice to extend their legacy technology for fixed-line voice communication towards broadband Internet (i.e. ADSL). At the same time it was also reasonably straight forward to extend their value proposition of fixed line voice communication towards mobile services, though this required substantial investments in infrastructure. These so-called triple plays (voice -> mobile -> broadband) emerged quite rapidly.

Like the telcos the cablecos also started out with a legacy technology, but in cable TV networks. They rapidly realized that the access to their customers' home, the so-called "last mile" was potentially a very lucartive asset. Soon they started to upgrade their networks to offer broadband Internet access. And with the commercial success of Internet telephony the cablecos didn't hesitate to jump on the opportunity to offer voice communications to their customers. Their own triple was born (TV & entertainment -> broadband -> voice).

But telcos and cablecos only became face-to-face competitors when the former decided to offer entertainment over their networks and the latter aimed at offering mobile telephony: their value propositions were suddenly completely overlapping. Yet, though similar both are entirely different regarding their business model. Telcos & Cablecos rely on totally different competencies and their business models are rooted in completely different technologies. To understand their respective forces and weaknesses and their future potential we should analyze their business model. If we can identify how they are different and how they are similar we might be able to understand which business design will outcompete the other.

For me this is a nice example that illustrates how industry analysis is reaching its limitations. We need a new unit of analysis that allows us to study two similar offerings coming from different areas based on different factors and technologies...