Know More: Bundling

(Columbia) July 23, 2003 - Jacob and Camille Turpin have a newborn son and family out of state. That means lots of long distance calls. Camille says when they heard they could get local and long distance services for one fixed rate, they jumped at it, "I really liked it. I thought it was going to be a lot easier."

Adi Kishore, a market analyst with the Yankee Group, says the plan they joined is typical of a trend in communications. It's called bundling, "25% percent of US households receive some sort of bundled service." Instead of getting your home phone, cellular, cable TV and internet connection from four companies, you might bundle as many as you can with one company and get one bill.

Dan Phythyon, Senior VP of Law and Policy with the US Telecom Association, says it's convenient and saves money, "In many cases, there'll be 10, 20, or 30% off of what the ala carte services may be." Kishore says companies who bundle are banking on customer loyalty, "Providers are seeing competition from a number of different directions, and the greatest defense against that, the best defense for that is to try and own the customer."

Kishore says that's not necessarily a good thing, "I think the greatest danger, from a consumer standpoint, of bundling is that you end up subscribing to more services than you need." Linda Sherry with Consumer Action agrees, "Phone bundling is not particularly always a good idea for people."

Sherry says low volume callers should pass on bundles, "If that person never called out of state, and that person never made a local toll call, then that would not be a good bundle for that person." She says look at your bills. See what services you now use and what you pay for them separately. Any bundled price needs to be lower, "When you look at that overall, then you get a true picture of what your needs are and whether or not you really need to buy a bundle."

Other potential pitfalls: introductory rates that may expire after a few months. Contracts that include penalties for early cancellation. Kishore says bundled bills can cause sticker shock, "Prepare for that bill. Don't be shocked when you get a $150 bill. You're actually saving money."

As for convenience, that brings us back to the Turpins. Camille says their promise of convenience vanished after Jake went online to discover their bundle had been bungled, "They put us on the wrong plan."

They canceled that package, but they're not giving up. Jacob says they're trying another bundle of services to save money as they share news about their bundle of joy, "If you can make it work, the service in general, I really still feel, is a great idea."

The most common bundle, by far, is the combination of local and long distance services. Market experts expect the variety of bundles to increase as technology such as high-speed internet becomes available in more areas.

Reported by Susan Aude
Posted 9:45pm by BrettWitt