Carriers Don’t Understand Receiving “One Bill” is More Valuable Than Cost Savings When Purchasing Telecom Bundle

FRAMINGHAM, MA – DECEMBER 17, 2003 – 2004 will be known as the battle of bundles. When consumers compare telecom service packages from their local phone company, long distance phone company and their cable company, how do they decide which package to buy? According to IDC, 49% of US households will choose the package that offers one bill, versus 32.4% households that will choose the package that offers only cost savings.

"Although we are seeing preliminary evidence that bundling is an effective strategy to sell more services to the household, effective execution will be critical to the success of this strategy," said Wu Zhou, research analyst in IDC's Residential Communications service. "Carriers must keep in mind that the local and long distance services are essential in a bundle offering, and that consumers are increasingly demanding the convenience benefits of having one bill."

The negligible difference in cellular/PCS usage is surprising, and may be explained by the lack of a truly seamless wireline/wireless bundle. Indeed, service providers must still overcome the hurdle of wireless subscribers being locked into annual contracts, and the high penalty of breaking those contracts will impede efforts to bundle.

IDC's recently released Identifying Growth Opportunities: 2003 U.S. Residential Telecommunications Survey (IDC #30345) examines how service providers should understand how household demand for wireline services has changed in a market flooded by novel communications applications attempting to supplant the telephone, and how to take advantage of opportunities in this market environment.

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