SBC's one-stop shop skips long distance service
In an effort to keep pace with AT&T, SBC is introducing its own one-stop shop for voice, TV, and Internet service, but is missing long distance.
There's just one problem. Unlike AT&T, SBC's package deal won't include long distance services. The local phone company is still barred by federal law from selling long distance until it proves it has opened its local markets to competition--a hurdle analysts say is likely a year or more away.
But that's not a crippling omission, at least in the early stages of the game, analysts said.
"Is this going to be the answer to all their problems? No," said Boyd Peterson, a telecommunications analyst with the Yankee Group. "But it makes sense for them to do as much as they can right now."
The drive to "bundle" consumer services has become a kind of holy grail in the telecommunications market, as firms try to shore up declining profit margins by enticing customers to buy more advanced services.
Yankee Group research shows that about two-thirds of consumers say they would like to get multiple services from the same provider on a single bill--a phenomenon still dubbed "latent demand" by researchers, as these types of service offerings are still rare.
AT&T has bet the most on this strategy, buying two leading cable companies for more than $110 billion. It plans to use its cable TV lines to offer local and long distance telephone service, as well as cable TV and high-speed Internet access.
The company has rolled out an early trial of these services in Fremont, California, but AT&T's bundled services will not be widely available until next year.
Bells look to compete
Ma Bell's entry into the $110 billion local telephone market has set the big local companies scrambling to stay ahead.
SBC's merger with Ameritech, and its promise to enter 30 new local phone markets following the closing of the deal, is in part a defensive move at preserving the company's core business. US West's merger with Qwest Communications International and Bell Atlantic's pairing with GTE also are defensive moves to shore up the firms' competitive position.
Similarly, the big local phone companies have sped up the introduction of high-speed digital subscriber line (DSL) Internet service as a defense against the rapid rollouts of cable modem services like Road Runner and the AT&T-affiliated Excite@Home.
But ultimately, local phone companies will have to compete head-to-head with their own bundles of individual local services. SBC is laying the groundwork for this with today's announcement, analysts said.
Starting today, SBC phone subscribers in Dallas, Texas, and Fremont, California, will be able to choose from a menu of different services, including local phone service, multiple phone lines or caller ID, dial-up or high-speed DSL Internet service, wireless phone access, and satellite TV through the DirecTV system.
Most of the packages include local phone line service, 60 minutes of local toll or "local long-distance" time, and one other service. Thus, monthly telephone service and a wireless phone plan could cost $64.90--a discount of about 8 percent--while phone service and a DSL line could cost $83.95--a savings of about 31 percent.
Other major cities will be added to the program over the course of the year, SBC said.
Analysts said the initial effort would serve as a kind of commercial-release trial project, focusing on high-end subscribers who already use an expensive bundle of services every month.
"There are going to be a lot of lessons the need to learn that are operational in nature," Peterson said. SBC and the other Bell companies still have a year or more in many areas to test different variations of their own bundled services, while AT&T completes its mergers and upgrades its cable systems to handle phone traffic, he noted.
Other Bell companies have offered discounts to customers who buy phone and Internet service, but SBC's is the most extensive so far.