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Nov 30, 2022
6 min

Speed Alone (10G+) Is Not a Winning Strategy—Innovative Experiences and Simplicity Are

The broadband industry is drunk on speed—an idea perpetuated by dumb-box hardware providers who push, “If you upgrade your network to a faster speed, you will win.” At Calix, we do not agree that this is a successful long-term strategy.
 

In the early stages of a market, this can work. We saw this with COAX over-building DSL. Speed helped the cable provider grow share. But, even then, it was not a pure speed play. Speed plus video experience drove growth, as best evidenced by Comcast with Xfinity. Comcast did an incredible job of building a multi-screen experience on top of its speed advantage versus legacy copper.
 

In a recent report, "The State of the Service Provider," (produced by us in collaboration with Heavy Reading), hundreds of BSPs say a surprising number of subscribers don't need more speed:

If given a choice of speed-based broadband plans (coax and fiber networks) from 100 MB to 1gig, the average market will trifurcate into ~20 percent at 100 MB, ~60 percent across middle tiers and ~20 percent at the 1gig service level. 
 

A recent Credit Suisse consumer broadband survey further validates this view. Across all types of broadband (cable or fiber), 82 percent of subscribers either don’t need more speed or they’re ambivalent about it.  
 

I made this point at ConneXions 2022. Speed-based marketing for most (unless the BSP has no competition) is a when discussion. If there are multiple, fast broadband providers who only market speed, it will lead to margin destroying price wars and costly “free-toaster” type incentives to attract new clients. Look no further than the mobile market for the price war. In this case, the “free toaster” is an iPhone:

T-Mobile offers ad

Avoiding the Speed/Price Trap: The BSP Strategy Must Innovate To Simplify and Excite 

Over 11 years, Calix has invested over $1 billion to make this happen with two focuses: 

  1. SIMPLIFY: Executing new levels of operating, support, and marketing efficiency. Calix Cloud® and platforms enabled AcenTek to deploy a green Intelligent Access EDGE™ network that reduced power consumption by 76 percent and drove significant OPEX gains through virtualization and automation. Chariton Valley cut network alarms by 98 percent and reduced turn-up time by 80 percent with Calix Cloud. Verizon’s sole-sourced to Calix Intelligent Access EDGE as they prioritized 80 percent OPEX savings annually over everything else. FTC cut support talk time by 55 percent with Calix Support Cloud (Support Cloud) and reduced truck rolls to record lows.

    What is not talked about enough is marketing and sales efficiency—as most broadband sales/marketing does not use behavioral data and remains speed/price-based using untargeted and inefficient channels like mail drops. To market efficiently, you need an insights engine that enables you to understand subscribers on a deep level. That is Calix Marketing Cloud (Marketing Cloud) and if you want an example of success, look at Nex-Tech. They leveraged Marketing Cloud to drive a 375 percent boost in Facebook engagement and 66 percent lower campaign costs. Marketing and sales need to radically shift.

    Operational efficiency delivers reliability and a consistent experience for the end subscriber while giving businesses the margin flexibility to compete (and cash-flow to invest) while delivering a return to investors/members. To achieve this type of operating efficiency, BSPs need platforms they can leverage to simplify their business and their business operations. That is what we are delivering with Intelligent Access EDGE and Calix Revenue EDGE™—platforms for business simplification. This includes systems that leverage standards-based software and cloud solutions that deliver the insights BSP teams need to operate with speed and efficiency.

    A BSP must achieve efficiency across all areas of the business—marketing, sales, and operations. Calix Cloud (and Calix Customer Success Services, which is brimming with best practices) makes that a reality. 


  2. EXCITE: Delivering managed services to differentiate from speed/price competitors. Building on a strong base of operational efficiency allows the BSP to focus on differentiating their experience through managed services. Five years ago, this was the exclusive domain of big telco/cable (such as Xfinity) as they had the size to build unique experiences and the leverage to get partners interested. The small/medium service provider was left behind.

    No more—thanks to the democratizing power of Calix platforms, including Calix Cloud.

    Calix became the market leader when we launched the sixth (Bark, to fight cyberbullying and help keep kids safe) and seventh (Servify Care for hometech protection) managed services—putting the big providers on notice that the entire market has now officially shifted, as our pace of innovation cannot be matched. At the same time Calix enabled our customers to be the first to market with hardened Wi-Fi 6E (GigaPro u6he, enabling outdoor 6 GHz) which led to us announcing the eighth (SmartTown) and ninth (SmartBiz) managed services at ConneXions 2022. We also announced a tenth managed service, Arlo wireless security camera system—to enable BSPs to offer simple, managed whole-home physical security—in development for the first half of 2023. Managed services 11 and 12 are in the design phases for the second half of 2023.

    This is largely what we talked about on the main stage at ConneXions 2022 (October 15-18, 2022)—being your partner as you embrace the change ahead.
     

If you missed us at ConneXions 2022, highlights from our main stage keynotes are also available to view here.

 

That being said, our team is ready to support your organization—by mapping out the path to long-term success. That is why we are investing in specialists and the industry’s largest Customer Success army dedicated to broadband service providers.

 

If you need assistance, please click here to engage with our team, or connect with me on LinkedIn.  

President and Chief Executive Officer (CEO)

Michael is the president and chief executive officer (CEO) and is on the Board of Directors at Calix. He brings over 20 years of experience leading growth, strategy, and transformation. Michael served as the company’s president and chief operating officer. Over his career, he has held executive positions in North America, Europe, and Asia in leadership roles at Salesforce, Bell Mobility, and Microsoft. Michael received his B.A. in Business Administration from Brock University, supported by ongoing executive education at Queens, Wharton, and USC.

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