The battle of the phone, cable and Internet bundles comes to WNY
When Manhattanite Alex Slack called the telephone company to order service, he wasn’t thinking about phone service. “We do have a home phone,” the 24-year-old said via his cell phone. But “we actually haven’t gotten around to setting that up yet.”
Home phone is an afterthought. Slack and his roommate get that, plus fast Internet and hundreds of TV channels in a “triple play” service package. Verizon pipes it all to his apartment through fiber-optic strands. The monthly fee is about $100.
It’s the battle of the bundles, and it’s coming to Western New York. The big phone and cable companies are ratcheting up their competition by hawking more services. Their three-in-one deals promise all the Internet downloading, telephone gabbing and TV watching that most households could want, for roughly $100 a month.
Time Warner Cable has already established its bundle beachhead in Western New York. It held a celebration this month marking the availability of its phone-over-cable service throughout the Buffalo-Niagara service territory. Now it can offer the big-three services — phone, TV and Internet — throughout the region with about 330,000 existing customer homes.
Rival Verizon isn’t far behind. The phone giant plans to begin piping TV signals over its fiber-optic “FiOS” service in some Buffalo suburbs this fall, having already launched in communities downstate. In the meantime, it bundles high-speed Internet with unlimited telephone service over FiOS for an advertised $74.99 a month.
Bundles are booming, analysts say.
Cable companies have signed up 15 million telephone customers in the U. S., and “the vast majority of them are in triple- play bundles,” said Bruce Leichtman, president of Leichtman Research Group in Durham, N. H.
Consumers are opting in because they see a way to save on bills that have taken a bigger and bigger slice out of their household budgets. And then there’s the convenience factor of dealing with a single vendor.
Just because they’re a value, however, doesn’t mean bundles are cheap. The services that are wrapped into the package deals tend to be the high-end ones — although they’re considered a necessity in many homes. For example, the included phone service is a digital all-you-can-talk buffet, with unlimited local and long-distance minutes, plus extra features such as caller ID.
So don’t take those advertised monthly prices too seriously. Before you ink in the cost to your monthly budget, have a look at the fine print. Equipment rental charges will add another $15 or $20. Taxes and franchise fees vary by area, but they’ll probably tack on at least $15 more for most people. The end result is more like $140 or more.
That means that for the frugal, there remain lower-price options. People can save by unbundling their services and settling for a lower Internet speed, for example, or fewer TV channels.
“When you’re paying $120, $130 a month, that’s $1,500 or $1,600 a year,” said Karl Schmelz, vice president for market development at Intertech Digital Entertainment, an installer for DISH Network. “People begin to say, ‘Hang on a second, am I really saving anything?’ ”
Known for occupying the low-price TV niche, DISH offers a 100-channel service with DVR that costs $39.99 a month, Schmelz said, its mainstream service option. Lower tiers are available at $30 and even $20 a month. Taxes on satellite service are generally less because it doesn’t rely on cables that use public rights-of-way.
As for Internet, DSL service comes for about $25 a month, substantially less than higher-speed fiber and cable services. Opt for dial-up, and save even more.
“We’re only $9.95 a month, which is pretty competitive,” said David Kaplan, chief operating officer of LocalNet Corp. The Internet on-ramp provider in Amherst has about 10,000 customers around Western New York on dial-up service, he said.
Tricks such as compressing signals and storing popular files in memory boost the effective speed, he said. Users who need to access only e-mail from home can get by without higher speeds.
“The bundles are just a marketing thing,” said Schmelz of Intertech. “In the pay-TV world, it is called a retention tactic.”
Retention is good for companies, but not necessarily for their customers. Households tend to stick with their bundle provider because it’s so much harder to ditch three services— and all their equipment — than one. Moreover, Verizon’s triple play comes with a one-or two-year contract that costs more than $100 to break.
Time Warner says there are no plans now to raise its bundle price, but neither is there a guarantee that the price will remain in place. You can opt for a price lock, getting a $10-a-month discount and locking prices for two years, but there’s a $150 early-termination fee.
Another vulnerability of all-in- one service is that it puts all your digital eggs in one basket. Problems at one company will have a bigger impact, since the signals carrying your voice calls travel alongside TV channels and high-speed Internet.
In terms of prices, phone and cable triple-play offers are within the same ballpark, analysts say. The main differences are in the features that each offers.
In Time Warner territory, the cable provider includes more local content. In Buffalo, Time Warner is broadcasting about 50 Bisons games a year.
Cable may also be the choice of the commitment-phobic, as its bundle can come without a contract.
Verizon’s FiOS, on the other hand, requires a one-or twoyear lock-in period. The company also says to allow at least four hours for installation, since a fiber-optic terminal needs to be installed and connected to your home phone, computer and TV. And say goodbye to the copper wires of the old phone system — they’ll be taken out.
Verizon’s service has its own strong points. It makes the most of its fiber-optic capacity with blazing Internet speeds. The $100 price bundle includes download speeds of 20 million bits per second. That’s five times the present cable download rate, although Time Warner says it is closing the gap. It will boost its speed to 10 mbps downloading and 1 mbps uploading.
The speeds may be more than most homes need, for now.
