Revenue Opportunities Abound in Home Network IT Support
Carl Weinschenk spoke with Kurt Scherf, vice president and principal analyst for Parks Associates. Scherf is the author of the report, “Digital Home Tech Support: Analysis and Forecasts.”
Weinschenk: What did the report look at?
Scherf: It’s really, as I’m thinking back, our third or fourth report we’ve done over the last four or five years. It looks at in-homes IT tech support services from the 50,000-foot perspective. The questions are, What is the opportunity for service providers? What are the opportunities looking ahead for them to expand their [in-home support] businesses? What sort of thing should they be looking at?
Weinschenk: What did you find?
Scherf: We leveraged a large consumer study that we did earlier this year, a survey of 2,000 broadband households. We revisited the demands for professional tech support across a number of areas. We focused very heavily on home computers and home networking things and the way it relates to service providers. Four or five years ago, we were told by service providers that a significant percentage of the customer support calls are related to issues that the service provider really has no control over. A computer that is full of spyware and viruses and other types of malware may appear to be running a “slow Internet.” People may call their service provider, but of course the home computer is out of the realm of the service provider beyond the initial activation.
Weinschenk: That’s the gear itself. What about the networks?
Scherf: The other issue is with home networking, which has become very prevalent among broadband households. There is a 50 percent penetration of broadband networks. Service providers do not necessarily have the responsibility for monitoring and maintaining the health of those [networks]. Again, as we started this research several years ago, that was a huge problem. Consumers would go to CompUSA and Circuit City — when they were still in business – and buy a Linksys router. When they had trouble configuring it and setting it up, we found that a quarter of people will call their service provider.
Weinschenk: That sounds like a lot of long days at the provider’s customer service center.
Scherf: The challenge for service providers is how to more quickly diagnose in-scope versus out-of-scope problems. In-scope means it’s the service provider’s problem, when it’s clear that the problem is with the network going to the home or service provider’s modem sitting in the home. Then it’s a problem which the service provider must address.
Out-of-scope is, well, the simplest way to put it is, “It ain’t my problem.” It’s a double whammy on service providers and has been for a couple of years. They are getting a phone call, and the level-one tech has to spend upwards of 25 minutes to resolve the problem. And then they may escalate it up in their own organization. But it winds up being an issue the service provider can’t or won’t address. They have spent money for a level-one agent and in the end have to say to the customer, “It’s not our problem. We are not going to fix it.” So you have a frustrated customer. Of course, that reflects poorly on overall satisfaction. What the report found is that there is a pretty significant opportunity to build a business around premium tech support.
Weinschenk: What has to happen for them to succeed in this area?
Scherf: I think number one, it’s an acknowledgement by the service provider that they can and should have a role in providing premium tech support to customers. There are a lot of questions about how they implement it. Do they build tech support service internally or work with a third-party company who sets up a remote support business? This is especially relevant this week because of some of my conversations with companies involved with smaller telecom companies operating in the U.S. These are tier two and tier three companies. What’s changed is that I would go on stage and speak at conferences geared to smaller operators and talk about premium tech support as an important offering among many value-added services they could offer. It comes down to something as basic as number one, customers need it and number two, they are willing to pay for it.
Weinschenk: What has changed?
Scherf: What has changed is the reaction I used to get was less than enthusiastic. Rarely had someone from the service provider come up to me and said, “This makes sense.” In conversations this week, [I found that] there are many operators that are either actively pursuing a path to internally provide more premium support services or considering buying some IT businesses in their communities so they can provide the personnel to come in and support residential and small business customers.
Weinschenk: Which approach is predominant?
Scherf: I would say that it is unclear at this time. I’ll say service providers are not sharing a whole lot of insight. They consider what they are doing and the way they are doing it pretty proprietary. They don’t want to tip their hand too much. I would say this: I think there are lots of reasons to choose to just outsource. There are companies that have years and years of good experience at building home IT tech support. They have turnkey solutions. They’ve got a good track record of solving problems on the first call. They are continually developing tools and processes to make that more efficient.
Weinschenk: It sounds like it would be tricky, though. What are the challenges?
Scherf: One of the questions is how to do the integration between what the service provider has set up in their back-office system and [the third party]. How do you tie together your core subscriber information and pass it on seamlessly to the third party? There is an interesting story in the integration of subscriber information from level-one tech support to the third party. How does that information find its way back to the core subscriber databases or subscriber management elements and then help the service provider better plan their businesses and the services they are going to offer their customers?
Weinschenk: But succeeding in this will be quite rewarding, it seems.
Scherf: At the simplest level, it’s “knowledge is power.” The more you know about subscribers and the type of equipment they have in their homes — what type of router do they have? Do they have a game console connected? That’s got implications about things like bandwidth usage. It could bring into play new opportunities for the service provider to perhaps offer new value-added services that can be positioned as complementary to the kinds of core digital elements the customer already has in place.
Weinschenk: It seems change is accelerating in this area.
Scherf: I believe that. It is pretty amazing to me because it seems just a couple of years ago, the question was “Why should I bother doing this?” That’s changed to “How should I do this?” It’s nice to hear that. Again, we put out several reports and have done a number of studies on issues like the desire for value-added services. Very consistently these support-type elements have filtered to the top in terms of consumer demand. We found that there is statistically higher customer satisfaction among broadband subscribers who have access to a premium technical support services.
