Wednesday, August 01, 2001

Looking for the Magic Bundle

But providers should move cautiously, according to Michael Greeson, a senior analyst at Parks Associates. Determining which of the new value-added services the residential consumer will most likely embrace may prove to be a disheartening process for many service providers. Although there may be a strong level of interest among consumers for these new services, Greeson says when costs and terms are introduced, the level of interest declines considerably.

"This is not to suggest that some specific services do not enjoy a higher level of interest across these variables," he says. "But if service providers misjudge consumer interest in these services, the financial consequences could be enormous."

....Greeson warns other broadband providers to think carefully about their strategy.

"[Broadband providers] are thinking they can sell a lot of second-line telephony," Greeson says. "But one of the primary drivers for subscribing to broadband among dial-up users is that they don't have to pay for a second phone line for their data service."

According to Greeson's research, 48 percent of the consumers that had second phone lines cancelled their secondary service immediately after getting broadband connectivity. "Broadband actually decreases the number of telephone lines used per home," he says. "We ask people how they would like to be able to provision a second line for a week when a relative comes to visit, and we don't find a lot of interest in that type of service from the consumer side."

However, Greeson says, when true converged networks are in place, consumers may find other services enticing, such as unified messaging that allows voice mail to be sent as data. "But that's years away, and the consumers will judge that on the virtues of its value."

....When it comes to getting all services from a signal provider on a single bill, Greeson says, "There is a high level of interest from most consumers. When you introduce cost savings into it, say $15 or $20 off what they are paying now, the interest goes up. When you ask broadband customers if they would switch service providers for a $25 a month savings, almost 75 percent said they would do it. That's huge."

Greeson adds that providers "should focus on getting broadband out there and getting the message of bundled services out there. Then gradually introduce these other value-added services."

From the article "Looking for the Magic Bundle."

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