There’s a Hole in the Bucket
Posted: 8/2003
There’s a Hole in the Bucket
are calling 2003 the Year of the Bundle. It certainly seems to be shaping up
that way as telecom service providers large and small are packaging local and
long-distance services for consumers.
The Bell companies, in response to
competition from cable companies, wireless and long-distance companies, have
been tendering a local/long distance combination in states where they have
in-region long-distance authority — all but seven states at press time.
IXCs, in turn, are getting into the bundling business. Witness the high-profile
MCI Neighborhood offer, which provides unlimited local and long-distance calling
for a flat rate. Even AT&T Corp. is getting with the program. In his keynote
address at SUPERCOMM 2003, AT&T CEO Dave Dorman said the company provides
local/long-distance to at least 3 million customers in 11 markets (22 by year
end).
J.D. Power and Associates reported
in July this bundling is improving customer satisfaction with their
long-distance providers.
What seems to be an obvious hole in
the minutes bucket is wireless. However, carriers are taking steps to fix this.
Verizon was a first mover with its Veriations offer last summer, but it has
received poor marks for its lack of integration between the wireline and
wireless offers. This summer, two other Bells are rolling out similar packages.
SBC Communications and BellSouth Corp. have teamed with their joint venture
company Cingular Wireless to offer a new service called MinuteShare, which
combines wireline and wireless minutes. A market trial is under way in Texas
with existing SBC local and long-distance customers who also subscribe to
Cingular’s wireless service.
A similar trial is being launched
this summer by AT&T, which is reselling the services of its spin-off
AT&T Wireless for a single billed product.
The value of the bundle is obvious.
It creates more revenue per subscriber in a climate where prices are continuing
to decline and it reduces churn. Yankee Group estimates the initial effect of
bundling two products is a 25 percent reduction in churn. Each additional
product reduces churn another 1 percent to 8 percent.
The firm says competitors need to
replicate the local, long-distance, wireless, DSL model, recognizing that this
is difficult for non-Bells competing in Bell territory.
The competitive industry
association, ASCENT, has taken steps to help competitors fill one hole —
wireless. The group has negotiated an umbrella wireless resale agreement. The
agreement should be applauded, but compared to the incumbents, it represents
only a drop in the bucket.
KHALI HENDERSON
[email protected].
Editor in Chief
