In the latest sign that the bundling trend is here to stay, SBC Communications plans to announce Monday its cheapest package yet, starting at about $85 per month. SBC said 22 percent of its customers already get some type of package deal for more than one type of telecommunications service, and officials believe they can bump that percentage higher.
"It's a confusing world out there for customers, so bundles and packages have been a critical component of our strategy," said Chris Sanborn, a marketing vice president of SBC. "Customers want convenience -- paying one bill -- savings and choice of features."
Local phone-service providers such as San Antonio-based SBC and New York-based Verizon Communications are being rocked by a decline in local phone lines and the willingness of consumers to switch phone providers. They see bundling as protection against both problems, analysts say.
"The benefit of bundling for the company is that it helps reduce churn, because customers don't leave when they use multiple services," said Jeff Kagan, an independent telecommunications analyst based in Atlanta. "By themselves, local phone service, long-distance and wireless all have high churn rates."
The new package being announced by SBC, the nation's second-largest local phone company, will be called SBC Connections. It will include local phone service, high-speed or dial-up Internet access and Cingular wireless service. Long-distance will be added in Texas and the five other states where SBC is allowed to sell it.
The company claims that consumers who order the package could save at least $276 from the price for ordering the services separately.
SBC isn't worried about discounting its services; it sees more to gain by attracting wireless and Internet customers from competitors in those industries.
"Existing SBC customers will be adding services," Sanborn said. "They may have two or three providers today; they can come to SBC and purchase all their services from us."
Verizon, which is the largest local phone company in the country but No. 2 to SBC in Texas, has its own package deals, called "Veriations," starting at more than $100 per month.
Spokesman Bill Kula said about 20 percent of Verizon's customers bundle their services -- and more than half of new customers buy a package.
"Bundling is the lifeblood of how we'll grow our business in the residential market," Kula said.
Atlanta-based BellSouth and Denver-based Qwest Communications also offer bundled services. Both trail SBC and Verizon in their ability to offer long-distance service.
For the most part, the local phone companies don't compete against each other. Their more immediate concern is competition from long-distance companies, wireless providers and cable companies, said Kagan, the telecommunications analyst.
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