Alpine Communications Blog

By Kim Leonard
TRIBUNE-REVIEW
Sunday, July 8, 2007

Bryan Althaus followed a typical path for Comcast customers about six weeks ago when he opted for a bigger bundle of TV, Internet and phone services from the cable company.

Althaus, 29, of Scott, was a Comcast cable TV customer when he got a computer and looked into Internet service in January. The company suggested he go for one of its popular bundles combining TV, Internet and its Comcast Digital Voice on one bill.

The teacher at Jefferson Middle School in Mt. Lebanon upgraded to a premium package recently, for about $160 a month, to get more channels.

"They get you to get the bundle," he said, "and then you don't want to give up the channels once you get used to them."

Cable companies, such as Philadelphia-based Comcast Corp., were the first to string together their TV, Internet and phone services as a way of locking in customers who years ago had different providers for each service.

Phone companies like Verizon Communications Corp. came later to the game, and Verizon will up the ante in Western Pennsylvania this fall or early winter when it introduces FiOS TV service on its new fiber-optic network. Verizon's current packages here include DirecTV satellite service as the video offering.

Who is winning the battle? "I hate to make it a horse race," said Bruce Leichtman, of the broadband analysis firm Leichtman Research Group in Durham, N.H.

Still, "Throughout the country, the cable companies are ahead. They have over 10 million phone subscribers nationwide, and the phone companies have half a million land line TV subscribers."

In the local market, Comcast was the first to introduce a three-product package with its $99 Triple Play promotion in March 2006.

For $33 a month each, new subscribers could get the company's Enhanced Cable with 75 channels, High-Speed Internet and Digital Voice phone service, advertised at a savings of about $450 over the year-long promotional period. Previous Comcast subscribers could add services for $33 each, as long as they ended up getting all three.

Verizon followed with its own packages and now offers six Verizon Freedom plans locally with mix-and-match phone, Internet and TV options -- including a $99.99 one that's comparable to Comcast's original bundle.

The Triple Freedom bundle has been available since January, and Verizon was selling DirecTV as a stand-alone option before that, spokesman Lee Gierczynski said.

Neither company will specify how well the packages have sold locally or disclose customer numbers, though Comcast spokeswoman Jody Doherty cites the bundles' popularity as a main reason for a recent expansion of the company's call center in the West End.

Comcast has encouraged many of its initial $99 bundle customers from mid-2006 switch over to a $129 product with about 70 more TV channels, and in general, has gotten customers like Althaus to order upgrades.

"They enjoy the products so much," Doherty said. "The Triple Play promotion may attract the consumer, but it is Comcast's quality of products and service that will keep them loyal."

Verizon has the first quadruple bundle in the region that includes Verizon Wireless service, along with DirecTV, Internet and phone for $139.99. Verizon shares ownership with Europe's Vodafone in Verizon Wireless.

Look for Comcast to follow with a fourth product, though not right away.

Comcast is one of four cable operators in a joint venture with Sprint Nextel to develop a mobile phone service that lets customers access their cable TV guide, as well as home voice mail and e-mail from their cell phones.

The service, called Pivot, is being tested for $33 a month in Boston and In Portland, Maine, and there's no word yet when it may reach Western Pennsylvania, Doherty said.

Verizon, meanwhile, has installed fiber-optic lines through much of Western Pennsylvania that carry phone and Internet service, and will allow expansion into TV service later this year.

The company is building a hub office for FiOS TV in the Strip District, and is negotiating for TV franchises with about 50 municipalities in the area, though no deals have yet been signed, Gierczynski said.

Verizon and AT&T, the nation's two biggest phone companies, have pursued changes in state and federal laws that would allow them to bypass the local franchising process, which has slowed their expansion into TV.

The company wouldn't say what its bundles with FiOS TV will cost in the region, though Verizon has packaged the service with phone and Internet in other areas for $99 a month for two years or $109.99 a month for one year.

The movement to expand their own TV services and regain some of the phone customers lost to cable companies doesn't mean Verizon and others in its industry will be dropping their satellite TV offerings.

Verizon has about 350,000 homes with FiOS TV, and more than 620,000 with DirecTV, and researcher Leichtman said phone companies overall have about 2.75 million subscribers through partnerships with satellite companies.

"That combination with satellite TV is more prevalent than any (fiber-optic) overbuild or land line service from the phone companies. That will remain in place," he said.

While cable and phone companies stress the cost savings associated with their bundles, consumers who benefit the most are the ones who consistently use what's included -- those who make a lot of phone calls, including long distance, each month, for example.

"Many will find they don't need that much," said John Breyault, of the Telecommunications Research and Action Center in Washington, "but a lot of consumers will choose (bundles) because they see it as a convenience. They don't have to think about how many minutes they are using, and the costs are all on the one bill."

Althaus used a cell phone for all his calls before signing up for the Comcast bundle this year.

Now that he has a land line phone at home, "I will start using it more," he said.