Web sites target confused telecom customers

A group of Web sites has hit the e-commerce market, aiming to sell telecommunications services and offer advice to consumers overwhelmed by the flood of choices.

Simplicity is the key to success for many of the communications comparison shopping sites--including Point.com, CellMania.com, and Essential.com, among others--according to analysts and executives.

Essential.com, for instance, offers consumers a bundled package of local phone service, long distance, and Internet access in addition to commodity services like electricity or heating oil.

The company buys communications services and energy from many different service providers, sometimes negotiating bulk discount deals, then resells them to consumers at competitive retail rates. Customers can pay a single consolidated monthly bill online.

"In the communications space, everyone wants the best price," said Essential.com spokesman Joe Palladino. "But we found that people really are confused about which plans to choose and what's the catch."

The sites buy communications services from different service providers, sometimes at a discount, then sell the services to consumers at competitive retail rates.

As the cost of communications services plummets, long distance calls, mobile phones, and high-speed Internet access are all now more affordable for a growing number of consumers. Yet the flood of new services can often be overwhelming for a consumer just looking for the lowest-priced deal.

"[Deregulation has] just made it more complicated because there's so much competition. There used to just be the phone company, but now there's so many choices suddenly the consumer has to become an expert," said Malcolm Maclachlan, an e-commerce analyst at International Data Corporation.

Although analysts question whether these sites will catch on with consumers, the growth of the telecommunications industry alone shows that the time is ripe for such services. For example, research by Dataquest shows that the U.S. cellular market--currently 85 million subscribers--is expected to double by 2003.

Simplicity rules
Several trends precipitated the rise of telecom portal sites. For one, consumers are increasingly willing to buy products online. And many consumers, in the face of so many new choices, are clamoring for a single stop they can use for several communications services, and pay for everything on a single bill.

By aggregating many different service plans together in a single clearinghouse, the sites hope to tap into a seemingly universal consumer concern: that technology is too complex.

"They're a great idea because they're pretty simple," IDC's Maclachlan said of the Web sites.

Poor customer service also has created an opportunity for the online sites, analysts said.

"What these sites are doing is stepping in and providing the customer service that telecommunications companies don't want to do because they're too busy marketing to people," Maclachlan said. "Frankly, the big telecommunications companies have horrible customer service."

Online comparison shopping sites also offer some intangible advantages.

"There's no pressure to buy immediately," Bryan Prohm, a wireless industry analyst at Dataquest, said of shopping online. "When the consumer walks into a retail store, the impetus of the clerk is to make the sale immediately because the odds are likely if the customer walks out, they won't be back."

The new players
In addition to Essential.com, a number of Web sites have stepped in to answer consumers' questions or otherwise bring clarity to the communications market, while grabbing advertising revenues or a fee for generating sales leads--and in some cases a cut of the transaction.

ABellTolls.com, another telecom portal site, also offers comparison shopping between long distance operators.

Other new companies, like WirelessAdvisor.com, Decide.com, TalkingOnAir.com, Telstreet.com, Content Unwired, Ephones.com, Point.com, and CellMania aim to clear up convoluted language behind cellular contracts and answer any questions consumers might have about telecom services.

CellMania, which launched nationally last month, offers information on cellular service packages from 44 carriers and gets a commission for activating service. The company, like many of the other wireless shopping Web sites, offers regional information based on a customer's zip code.

"We allow people to say 'Here are my needs, here's where I live, what should I buy?'" Neerav Berry, co-founder and vice president of marketing at CellMania, said. "Once you see everything side-by-side, the choices are very clear."

Ephones, formerly Totally Wireless, began as a traditional brick-and-mortar cellular retailer, and still has 19 stores in Seattle, Salt Lake City, and the San Francisco Bay area.

Unlike the traditional cellular sales model, in which retailers were typically wedded to one carrier, Ephones hoped to offer consumers a side-by-side choice of competing plans in their stores.

"We quickly came to the realization that we shouldn't roll out nationwide when we had a vehicle called the Internet to do it more cost effectively," said Ephones chief executive Mike Merrill.

Some executives believe the approaching holiday season will be a crucial one for the increasingly competitive online communications service sales market.

"I think Christmas is going to be like the Iowa caucus," Merrill said. "I think there will be some people who realize they won't make it and there will be a couple front-runners who will keep on going."