Triple-play prices grow more elastic

Triple-play offers increasingly shaped through negotiation

As competition heats up for triple-play telecom services, the prices for those offerings are becoming more elastic—something customers are finding when they threaten to switch providers.

In a report on telecom bundles published this week, Consumer Reports pointed out that many customers are negotiating better triple-play deals once their contracts or introductory promotions have expired.

“We’re moving to a customer-retention type of model,” said Doug Williams, an analyst with Jupiter Research.“The market is reaching a more mature level. There are not as many new broadband customers to go after. [Existing customers] may have alternative triple-play providers now in certain parts of the country. [Customers] now have an option to jump to another provider and get a better deal. That puts them in a position of power in the negotiations with their current provider.”

Bundled offers make service providers even more vulnerable in these negotiations, since losing one bundled customer means losing two or three revenue streams. Also lost is the opportunity to upsell new services and features. And with one- and two-year contracts common in today’s market, winning a customer back after they’ve made the switch can be next-to-impossible in the near term.

Some customers, at least, appear to be taking advantage of their new power. On Consumer Reports’ blog, one customer reported being offered a $10 monthly discount from Cablevision upon threatening to sign up for Verizon’s FiOS service. (It didn’t work.) Another convinced Verizon to lower its rates (and even got a $25 gift card as a thank-you for staying).

Some providers will let customers cancel individual services if they keep others. For example, Embarq is offering standalone DSL, but only to customers who threaten to cancel their landline service. AT&T has made similar moves.

(continued on next page)