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Triple-Play Telecom Competition Gives New Power to Consumers


21/01/2008

As competition heats up in the triple-play telecom market, the cost of bundled communications and entertainment services is becoming increasingly elastic, as many users have discovered.

Customers who threaten to switch carriers have been able to negotiate better triple-play deals after the expiry of their contracts or introductory promotions. This trend stems from the increased competition as cable and telephone companies go head to head in the voice and video markets, and each carrier has more to lose by giving up on a customer.

We`re moving to a customer-retention type of model, commented Jupiter Research analyst, Doug Williams.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.

Many customers are taking advantage of this newfound power, as is evident on the Consumer Reports blog, where visitors detail the attempts of rivals like Verizon and Cablevision to ‘bribe’ them to stay.

So what’s the going rate for a given telecom provider`s triple-play bundle? I imagine it goes on a case-by-case basis, Williams ventured.

And its not just on the level of price that triple-play providers are competing. Other perks and incentives (such as free TVs or Digital Video Recorders) are often put on the table.

When customers reach out to us to say they are leaving, we have many options, explained on Verizon spokesman. Depending on what they already buy from us, we can offer them regular bundles they did not know about or apply various promotions and discounts to keep the customers. We don`t publish the details for competitive reasons, but we do not crawl down into the pricing gutter just to lowball others. We make it clear to customers that it is value, not price, that matters.

In terms of raw pricing, customers also have a newfound advantage, as the cost of a triple-play bundle continues to gradually decline. For the time being, $99 is the standard price of a basic package, according to Mr. Williams.

It seems like there`s not a tremendous willingness to go lower than that, he explained. It`s almost a prisoner’s dilemma. Two operators might both adhere to the $99 mark and say, I won`t go below that, and as long as my competitor doesn`t, I`ll be fine.` But the minute one provider says, I`ll keep more customers if I go to $85,` they`ll both eat away at their margins and reach a new equilibrium.



 

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