Consumers not taking to package deals
A new survey says consumers like the idea of buying phone, cable TV, and Internet service from the same company, but a relatively small fraction are doing so today.
Seventy-one percent of consumers would prefer to get a single bill for all of their communications services--such as local and long distance calling, wireless phone service, cable and satellite TV, and Internet access--according to survey by PricewaterhouseCoopers and Kenan Systems.
But just 23 percent say they now buy even two such services from a single company.
Many major telephone companies have bet their future on the hope that consumers eventually will want to buy their phone, cable TV, and Internet services from one firm. But regulatory and technological hurdles have so far kept telcos from becoming one-stop communications shopping centers.
Much of the logic behind AT&T's pending merger with Tele-Communications Incorporated is based the assumption that offering bundled services will win consumers' loyalty. Once the merger closes, the long distance company will finally be able to offer local telephone service without going through the Baby Bells' networks. Additionally, the company will control the high-speed @Home Internet access service.
AT&T already offers a "Personal Network" package that allows consumers to lump together billing for long distance, wireless, and Internet services. The wireless service is not available in all areas of the country, however, undermining the bundle's utility for many consumers.
MCI WorldCom is pursuing its own package strategy, offering lower prices to consumers who sign up for its long distance and Internet services. But the company as yet has no internal wireless division, hampering its ability to compete in the consumer bundled game, analysts say.
For their part, the Baby Bells are trying desperately to win regulatory approval to enter the long distance market in their own home territories. This will allow the companies to offer their own package deals on voice and Internet service. But federal regulators are not expected to approve the Bells' long distance entry until late 1999.
Local phone companies have started to offer some package deals--such as discounts on Internet service for consumers that buy high-speed digital subscriber line access. Few deals involving local phone service have yet come from the local phone companies, however.
The PricewaterhouseCoopers/Kenan study also pointed out some problems for cable companies as they try to offer bundled services, such as telephone and Internet access, independently of the telephone companies.
In the survey, consumers gave telephone companies a strong customer service edge over cable companies. More than 80 percent said local and long distance companies did a good or excellent job responding to customer complaints. Only 69 percent said the same for cable companies.
On a related issue, the survey found that uninterrupted service was considerably more important to consumers than having a single company handle all of their billing and complaint questions.
The survey results were based on a telephony survey of 1004 adults in late December 1998.