Friday, December 21, 2007

FiOS quote of note

In the Herald-Tribune article about VZ giving away a TV with a 2-year FiOS triple-play contract:

"There's always specials and deals," Durkin said. "Has it risen to another level? If FiOS was all that it's cracked up to be, why would you try to entice them with a TV and try to lock them into a contract?"

Kagan is quoted as saying "Telephone and cable companies are going to start offering everything in a bundle." They have been doing this for a couple of years now - local, LD, internet and satellite TV and cellular in various (confusing) ways.

Not for nothing, Jeff, but how is it "customers will be the big winners", when "Verizon just increased the cost of its service by $5 a month, and Comcast will increase rates in Sarasota and Manatee counties by 3.2 percent as of Jan. 1"??? You "analysts" are great at giving good quote that has NOTHING to do with the market or segment you are quoted on. Good job!

Cellular, TV, Voice, and Internet Access sectors are all flattening. Just about everyone with a computer has some form of internet access. There are more cell phones than DVD players. Landlines are decreasing as people go cell-only. TV viewership is declining. (And this writer's strike did not help anyone). So the Telco says: Let's bundle them in a long term contract with good promo pricing, then add tons of fees and surcharges to make it up. Yeah, Jeff, that is GREAT for the consumer.

BTW, Ken Wieland, Editor in Chief of Telecommunications magazine, reported on a survey by KMPG that says bundling isn't working:

The results of the KPMG report shouldn’t come as a complete surprise to carriers. After all, the discount is one of the big selling points for bundled service packages. So, if triple-play packages attract mostly price conscious customers (which the KPMG survey confirms), carriers can’t expect too much loyalty based on "convenience." What surely must be depressing for carriers is how far price outweighs any other factor in consumers’ service choices. Not even extensive marketing budgets to boost a carrier’s image can alter this, it seems. "When we talk to consumers, the influence of brand is certainly not as powerful as the influence of pricing," says Carl Geppert, a KPMG partner. It also means a bundled service strategy is a dangerous one for carriers to pursue. Not only are they offering discounts, but churn, potentially, is a lot more damaging. There are now three or four services customers might abandon rather than just one. If there is little customer loyalty pay-off through discounted bundled packages, carriers seem to be running a careless risk by offering them.

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