Sunday, July 27, 2003
'Bundled' telecom services are now available but often cost more.
CBS MARKETWATCH
WASHINGTON -- Bills, bills and more bills: Cable, Internet, wireless, local phone, long-distance. There must be a better way. And there is, sort of.
Phone and cable companies offer a variety of "bundled" packages that combine two or more services, all on just one bill and at seemingly sharp discounts. Sounds appealing.
Yet fully bundled plans aren't for everybody. Many Americans -- perhaps even a majority -- might not spend enough time on the phone to justify their cost. And consumers often can find greater savings by buying a la carte.
Another problem: Lack of availability. Companies provide some services in one area but not in another. And none can offer all five major communications services on one bill.
As always, it pays to shop around and to do your homework.
"It is important that consumers research all their options and decide what combination of services and providers works best for them," said K. Dane Snowden, chief of consumer affairs at the Federal Communications Commission.
Already, 40 percent of American consumers bundle to some degree, up from 26 percent last year, according to market researcher J.D. Powers.
Many don't even realize it. Some buy their local phone service from AT & amp;T, for instance. Others may get high-speed Internet access from the cable company.
What's taking place
Yet in the past year, the industry's long-cherished aim of providing larger discount bundles finally has taken off. The strategy has been fueled by the Baby Bells' entrance into long distance, a market from which they'd been historically barred.
Indeed, competition has become so fierce that carriers constantly try to poach each other's best and highest-paying customers. Cut-rate deals and all-you-can-eat phone plans are the norm.
Bundling is primarily seen as a way to protect a company's turf. It can cost hundreds of dollars to acquire each customer -- costs that companies have to eat if those customers quickly depart.
So far, the regional Baby Bells SBC, Verizon and BellSouth (BLS) offer the most extensive bundles. They can sell local, long distance, wireless and fast Internet to most -- but by no means all -- of their customers.
"All of them are offering different kinds of bundles to consumers. The problem is, none of them are complete," said Jay Pultz, a market researcher at Gartner Inc. "Cable can do everything but wireless. The Bells can do everything but TV. The long-distance carriers might miss wireless and TV."
What poll showed
Consumers say they want more. Steve Kirkeby, senior director of telecommunications at J.D. Power, said 43 percent of 130,000 people recently surveyed by his firm probably would switch to a company that provided all five telecom services.
"Bundling is driving everything now," he said.
Interestingly, consumers don't cite discount prices as the top attraction. What they prefer most is the convenience and a single bill, J.D. Power found. Pricing came in third.
In fact, many people who choose bundling might find that they aren't saving any money at all.
The cutoff point appears to be around $110 a month for all services, excluding pay TV. That's what the average American household spent during the first three months of this year, according to TNS Telecoms.
If consumers spend less than $110 a month, they're probably better off looking for the best deal on each service -- unless their biggest priority is a single bill.
"A lot of people don't use enough minutes to justify a bundling plan, said David Wood, founder of CheapTelephoneBills.com http://www.cheaptelephonebills.com/.
For wireless, prepaid plans are a good option for those who don't make many calls. One popular service is Tracfone http://www.tracfone.com, available at Wal-Mart, RadioShack, Safeway and other retail chains.
Such plans are more expensive on a per-minute basis, but customers pay only for what they use. Nor are customers locked into long-term contracts that carry stiff financial penalties if terminated early. Major wireless carriers typically charge up to several hundred dollars.
For long distance, thrift-conscious consumers can find good deals from no-frills carriers at sites such as CheapTelephoneBills.com and SaveOnPhone.com http://www.saveonphone.com/. Those sites rate plans according to price and other factors.