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Consumer Reports


Consolidated telecom services can cost mores

http://www.jewishworldreview.com | (KRT) Bills, bills, and more bills: Cable, Internet, wireless, local phone, long-distance. There must be a better way. And there is, sort of.

Phone and cable companies offer a variety of "bundled" packages that combine two or more services, all on just one bill and at seemingly sharp discounts. Sounds appealing.

Yet fully bundled plans aren't for everybody. Many Americans - perhaps even a majority - might not spend enough time on the phone to justify their cost. And consumers often can find greater savings by buying a la carte.

Another problem: Lack of availability. Companies provide some services in one area but not in another. And none can offer all five major communications services on one bill.

As always, it pays to shop around and to do your homework.

"It is important that consumers research all their options and decide what combination of services and providers works best for them," said K. Dane Snowden, chief of consumer affairs at the Federal Communications Commission.

Already, 40 percent of American consumers bundle to some degree, up from 26 percent last year, according to market researcher J.D. Powers.

Many don't even realize it. Some buy their local phone service from AT&T, for instance. Others may get high-speed Internet access from the cable company.

Yet in the past year, the industry's long cherished aim of providing larger discount bundles finally has taken off. The strategy has been fueled by the Baby Bells' entrance into long distance, a market from which they'd been historically barred.

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Indeed, competition has become so fierce that carriers constantly try to poach each other's best and highest-paying customers. Cut-rate deals and all-you-can-eat phone plans are the norm.

Bundling is primarily seen as a way to protect a company's turf. It can cost hundreds of dollars to acquire each customer - costs that companies have to eat if those customers quickly depart.

"Our basic strategy is built upon the philosophy of attracting and retaining customers," said Michael Coe, a spokesman at SBC Communications (SBC). "Long distance ties it all together."

So far, the regional Baby Bells SBC, Verizon and BellSouth (BLS) offer the most extensive bundles. They can sell local, long distance, wireless and fast Internet to most - but by no means all - of their customers.

"All of them are offering different kinds of bundles to consumers. The problem is, none of them are complete," said Jay Pultz, a market researcher at Gartner Inc. "Cable can do everything but wireless. The Bells can do everything but TV. The long-distance carriers might miss wireless and TV."

Consumers say they want more. Steve Kirkeby, senior director of telecommunications at J.D. Power, said 43 percent of 130,000 people recently surveyed by his firm probably would switch to a company that provided all five telecom services.

"Bundling is driving everything now," he said.

Interestingly, consumers don't cite discount prices as the top attraction. What they prefer most is the convenience and a single bill, J.D. Power found. Pricing came in third.

In fact, many people who choose bundling might find that they aren't saving any money at all.

The cutoff point appears to be around $110 a month for all services, excluding pay TV. That's what the average American household spent during the first three months of this year, according to TNS Telecoms.

If consumers spend less than $110 a month, they're probably better off looking for the best deal on each service - unless their biggest priority is a single bill.

"A lot of people don't use enough minutes to justify a bundling plan, said David Wood, founder of CheapTelephoneBills.com http://www.cheaptelephonebills.com/.

For wireless, prepaid plans are a good option for those who don't make many calls. One popular service is Tracfone http://www.tracfone.com, available at Wal-Mart, RadioShack, Safeway and other retail chains.

Such plans are more expensive on a per-minute basis, but customers pay only for what they use. Nor are customers locked into long-term contracts that carry stiff financial penalties if terminated early. Major wireless carriers typically charge up to several hundred dollars.

For long distance, thrift-conscious consumers can find good deals from no-frills carriers at sites such as CheapTelephoneBills.com and SaveOnPhone.com http://www.saveonphone.com/. Those sites rate plans according to price and other factors.

For the most part, quality of service is on par with the well-known long-distance carriers such as AT&T (T) and Sprint (FON). No-frills carriers lease phone lines from their bigger and better known rivals, but they don't have to pay huge marketing costs. The savings are passed along to customers.

Increasingly, no-frills carriers are leasing the phone lines of the Baby Bells to offer local service as well.

The customers most likely to benefit from bundled plans are those who make lots of wireless and long-distance calls and who crave high-speed access to the Internet. Typically, they spend well over $110 a month on phone, wireless and Internet service.

By choosing a larger bundle, big-spending customers can reap sizable savings. Verizon (VZ), for example, has cut its price on regular high-speed Internet from as much as $60 to as little as $30 for customers who subscribe to the company's other services.

"The more you buy the more you save," said Christy Reap, a Verizon spokeswoman.

Still, even big spenders have to beware. If they sharply exceed the allotted minutes on their wireless plan or make too many long-distance calls at peak hours, their bills could skyrocket. There goes any potential savings.

As a result, customers have to choose their plans wisely. Most companies offer a slew of options.

"There's definitely value here," said Charles White, vice president of TNS Telecoms. "It's a matter of whether you are using all the minutes available - or whether you are using too much."

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