Bundling cellular equipment with a service plan played a significant role in the success of the wireless industry. People could justify penny phones, even if it meant signing up for two years of cellular service. No one can pass up a bargain and most anything that can be bought for a coin that one can easily pick up from the street can be considered a bargain. (Who has successfully escaped the lures of the book-of-the-month, CD-of-the-month and video-of-the-month clubs)?
Going forward, however, the concept of bundling wireless services with other telecom and entertainment services becomes more complex.
In study after study, consumers have said they would like to purchase all telecom products from one carrier. But what they really mean is they would like to purchase all their telecom products from one carrier and get a deal. Companies that bundle telecom services successfully will pay as much attention to the “deal” part of the equation as the convenience portion.
Americans love one-stop shopping. Grocery stores have evolved into flower shops, prescriptions centers, banks, take-out restaurants and video rental stores. Using that analogy (and all those studies where consumers have said they would like to buy their telecom services from one carrier), it stands to reason that a package of local phone, long-distance and wireless service could be sold alongside cable TV service and Internet access.
Except what Americans really want is a bargain-remember how those penny phones helped to make the marketplace. Cable service, local phone service and Internet access each can cost about $30 a month. Wireless service averages about $50 and let’s say people spend about $100 a month on long-distance service. Individually, each one of those bills is not overwhelming. The bills stagger in throughout the month and stagger out accordingly. Bundle those bills onto one order, all due at one time, and now the consumer must pay $240. Some lease payments on new vehicles are cheaper than that.
To successfully sell that bundle, carriers are going to have to convince the consumer that he/she is getting a deal. Yes, individually those services cost $240, but Carrier X can offer them (for a limited time only, to you, our specially selected customer) at a discount for $200.
In shopping, the philosophy is to never pay retail. The telecom operator that can successfully offer a bundled package of services will learn to exploit that philosophy.
