The incumbent telcos have largely failed to use triple or quadruple play effectively as a mechanism to propel themselves into the new market of digital media.

From a marketing perspective this was not exactly a forgone conclusion, but perhaps from a vertically-integrated business position (especially with hindsight) it was. Nevertheless the incumbents at least had a chance to show that they could jump the S-curve from the old telecoms market into a new digital media market.

As I have indicated many times, telcos are great engineers but they are weak in marketing and media creativity. This is simply because the underlying vertically-integrated business models upon which their organisations are built do not stimulate innovation. Such organisations have to aim their products and services at mass market averages; they are not specialists in any of them. This leads to mediocre products. In the hyper-innovative and competitive Internet environment these mediocre offerings don’t stand a chance.

Rather than utilising its unique mix of telco commodity (audio, video, data) around the emerging Internet business models, and using them to build new products, the telcos simply bundled the lot together, offering them at a marginal discount, and hoped for the best.

With telco commodity prices dropping by the hour, there was no real incentive for users to take that discount as prices would drop anyway. Individual products could be obtained more cheaply by shopping around and building one’s own triple play model. There was also a reluctance to sign long-term triple play contracts – not a very attractive proposition in this volatile environment.

What the telcos failed to do was create truly integrated products (eg, look at Google) and to sell applications based on them, rather than simply bundling together the various building blocks. In the end, triple play was just another attempt to keep their vertically-integrated telco models running, rather than being a serious effort to build something better for their customers.

Anyway there is little chance that telcos can truly compete in the applications market. They have already lost that battle to Google, Facebook, MySpace, Yahoo, Alibaba, etc. YouTube was perhaps the single biggest killer of the video element in the triple play model.

Related Research: 2008 Global Digital Media – Advertising and Marketing