Consumers Prefer Local Telco for Bundling

There is a strong interest among consumers for receiving multiple communications services (such as local and long distance, cable TV, cellular, paging and Internet and high-speed access) from a single provider, according to research by the Yankee Group and Cable & Telecommunications Association for Marketing (CTAM), and the local phone company is the most likely source.

The Yankee Group’s annual “Technologically Advanced Family Survey”, which measures consumers’ experiences and interaction with more than 100 products and services, found that consumers show a strong interest in receiving multiple communications services from a single provider. Thirty percent of all consumers and 44 percent of early adopters are interested in purchasing a voice, video and data bundle from the right provider.

Fifty percent of consumers point to the local telephone company as one of the providers they would first turn to for this integrated package, compared with 29 percent who cite a long-distance provider and 25 percent who say a cable company. Despite widespread beliefs to the contrary, only 44 percent of consumers are motivated to obtain such services by discounts. Seventy-one percent of consumers cite a single bill as a major incentive to use a single provider, and 60 percent cite “simplicity.” Nineteen percent of consumers imagine they would “receive better service” from a single provider.

“Consumers want choice and competition, and will migrate toward providers that offer more robust products combined with better customer service and perceived sufficient value for monthly charges,” said Meredith Rosenberg, vice president of the Consumer Market Convergence research and consulting practice at the Yankee Group. “There is a great opportunity, but providers must effectively market these value propositions, offering ‘solutions’ to distinct consumer segments. The result will be an edge over competitors that provide only standalone services, particularly in those markets that are currently underserved.”

Research done by CTAM, which tracks consumer interest in bundling with an eye on the cable industry, found that 56 percent of consumers express an interest in using one company for all of their communications services.

CTAM’s numbers also found that the local telephone company is the most popular choice as a provider of bundled services. Cable providers were the second most popular choice, chosen by 16 percent of consumers. There is also a lot of market share up for grabs, as 20 percent of those consumers interested in bundled services don’t express a solid preference for a provider.

Customer service was cited in the CTAM research as the No. 1 reason (by 32 percent) for the selection of a company to provide bundled services, while one out of five (16 percent) consumers considered the relationship they already have with the company as the most important criteria.

CTAM’s research found more emphasis on savings, as 69 percent responded favorably to monthly discounts based on subscribing to multiple services.

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