Bundles of convenience, at what price?

Paying for cable TV, telephone, Internet, and other services with one check benefits some consumers, but not all.

People who don't enjoy paying their bills at the end of the month could be in for a little relief - but it might cost them.

For the past six months, several companies across the country have begun heavily promoting "bundled" services of video, voice, and data. Cable companies including Comcast, Cox, and RCN are offering cable TV, high-speed Internet service, along with local and long-distance telephone service.

Telecommunications companies including SBC and Verizon are marketing their standard local and long- distance telephone service combined with high-speed Internet service, cellular telephone service, and even some satellite TV packages.

Some of these companies promise to consolidate all of these fees onto a single statement. The feature's simplicity comes as a timely boon for consumers overwhelmed by the multiplication of new services for the home.

"Convenience is probably the biggest issue for consumers," says Michael Goodman, a senior analyst with the Yankee Group, a Boston market-research firm. "A third of all households are very interested in having a single provider."

Several bundled deals offer price savings. But over the long term, experts say, consumers likely will pay more for the ability to pay less often.

"You'll see introductory offers," says Mr. Goodman. "But [these companies] don't want to get into the position where they are undercutting their old prices."

Several times over the past decade, companies have promoted bundles only to withdraw them soon after because of a lack of consumer interest.

Technology drives a bundling boom

But advances in digital technology have allowed certain products, including high-speed Internet and cellphone service, to become more marketable than they were five years ago. So there's now more to bundle.

But the main force behind the bundling trend is competition. Regional "baby Bell" companies are offering long-distance service, and long-distance providers are offering local service - both in an effort to draw away each other's customers. Cable companies are bundling in their battle with satellite TV providers. And both telephone and cable companies are competing against each other for high-speed Internet customers.

By combining all these services onto one bill, the companies hope to persuade customers to forget - or switch from - their competitors.

The effort also builds consumer loyalty. For example, the percentage of subscribers to Cox's cable service who cancel their service each year is 53 percent lower among those who also subscribe to the company's high-speed Internet and telephone service.

"Bundles help prevent core customers from defecting because they become accustomed to paying one provider," says Mark Kersey, a senior analyst with ARS, a market-research firm in La Jolla, Calif.

Whether people should bundle their bills depends on several variables. One is availability. Because companies have developed services such as long-distance and high-speed Internet only in certain parts of the country, bundling isn't always an option.

For consumers who have the opportunity, the most important consideration is price. Right now, many are being enticed by significant discounts. The most common are usually offered on telephone service by cable companies and Internet service by telephone companies.

Cox lets customers who receive cable, Internet, and telephone service elect to pick up free movie channels or add 100 minutes of free long-distance. The deal lasts for the duration of the customer's contract.

"Customers have said to us, 'If I put all my eggs in one basket with Cox, I feel like I deserve some extra value from you,' " says Joe Rooney, Cox's senior vice president of marketing.

Consumers who subscribe to one of a variety of phone packages at Verizon pay $35 for high-speed Internet, compared with the standard $50 price. They can also subtract $5 from their cellphone bill.

Comcast cuts $5 off the price on each of its cable, Internet, and telephone services for those who subscribe to all three.

Overall, many of these programs require customers to sign one-year contracts for specific services. Others require that they subscribe to extra features, including caller ID and three-way calling.

"If you're not a customer who gets a lot of calling features or makes a lot of long-distance calls, you won't see a lot of big savings," says Mr. Kersey.

Disappearing discounts

Consumers also need to watch out for discounts that fade after a few months. For example, RCN customers who subscribe to cable, Internet, and local and long-distance telephone service are charged $115 for the first three months. But the price goes up to $159 after that.

Other companies that promise a range of services can't deliver on discounts or bundled billing. SBC Pacific Bell now promotes a bundle of telephone and Internet services along with satellite TV through EchoStar's Dish service.

But during a call to SBC's customer service, the agent said that customers need to order their satellite package straight from Dish. The agent wasn't even sure if a discount was available.

"Those are more marketing ploys and press-release partnerships more than anything else," says Goodman.

It is unclear, say experts, whether most consumers eventually will receive all of their communication services bundled or from one single company.

A big challenge for most companies now is making their services available nationwide. Several companies that offer nationwide cellular service, for example, may not be able to provide telephone and cable services in the same region.

For now, many consumers might do better by taking advantage of services such as discount calling cards and smaller telephone-service providers to reduce their monthly bills.

Others may be more comfortable sticking with a variety of providers. "It remains to be seen if consumer culture can be altered enough for bundling to be everywhere," says Kersey.

You've read  of  free articles. Subscribe to continue.
QR Code to Bundles of convenience, at what price?
Read this article in
QR Code to Subscription page
Start your subscription today