Telecoms Bundle Up for Competition

SBC Communications Inc. is airing a radio advertisement that compares its service offerings to the fusion of a Thai restaurant and an Italian restaurant.

The telecommunications giant, soon to be re-branded as AT&T, may be comparing itself to “Thai-talian,” but it doesn’t hold a monopoly on the bundling of services.

“It’s called the triple play — voice, video and data,” said John Strode, vice president of E. Ritter Communications Holdings Inc. of Marked Tree. And the triple play, Strode said, is all about building customer loyalty.

E. Ritter has three local exchange subsidiary telephone companies in the state, all of which offer traditional wireline telephone services to rural customers, as well as dial-up or DSL Internet access, long distance, video entertainment via its own cable companies and, in some instances, wireless service through Alltel.

“Studies have shown that the more services you get, the more loyal the customer is,” Strode said. “That’s where we want to get. That’s the [new] communications business model.”

The new business model is important because the technological landscape for exchange companies has changed dramatically in the last several years. And it will continue to change as customers demand faster Internet and more convenient phone service, said Ed Drilling, Arkansas president of SBC Communications.

“Our goal is to be the only telecommunications provider our customers need,” Drilling said. He noted that that includes entertainment like television.

SBC of San Antonio, Texas, acquired AT&T Corp., in a $16 billion deal that closed Nov. 18.

SBC Corp.’s two subsidiaries in Arkansas had $517.9 million in revenue in 2004, up less than half a percent from $515.8 million for calendar 2003, according to filings with the Arkansas Public Service Commission.

AT&T’s Arkansas revenue data has been protected from public disclosure by the APSC.

The new company will eventually take on the AT&T moniker. The buyout will give current SBC business customers even better connectivity abroad, but it won’t have any immediate affect on the company’s residential or small business services, Drilling said.

“It’s still about doing business on a local basis,” he said, and bundling services is part of that.

The trend to bundle and diversify services has been the telephone industry’s reaction to customer demand, according to Drilling, Strode and other state telecommunications officers.

In order to save on significant infrastructure investments, many wireline companies have partnered with satellite providers such as the Dish Network or DirecTV to offer television service. The telephone company “outsources” and the customer gets to pay for both TV and phone on one bill.

The one bill concept is a big convenience factor for many customers, said Cathy Foraker, external affairs manager of SBC’s Northwest Arkansas office in Fayetteville.

Drilling said about 60 percent of SBC’s customers have some permutation of a bundled billing service, which might include a traditional landline with Internet service, or a landline and cell phone service through Cingular Wireless. SBC owns 60 percent of Cingular.

But while some companies are trying to pick up bits of all segments, Alltel Corp. of Little Rock is reportedly looking to sell its entire wireline segment and focus solely on wireless services. Three potential buyers have been identified by the Financial Times of London, but there’s no word from Alltel on the validity.

Drilling echoes Strode about building customer loyalty and remaining competitive with diversified segments of the telecom industry.

“Video is gearing up to offer voice, so we have to do the same [and offer video],” said Jeff Jones, a spokesman for Monroe, La.,-based CenturyTel, which operates seven subsidiaries in Arkansas, including CenturyTel of Northwest Arkansas.

CenturyTel also offers television through the Dish Network, but hasn’t been pushing the service Jones said.

The company recently renegotiated agreements with Dish, and will become more aggressive in marketing TV services soon, he said.

“Bundling is just a tool,” Jones said. “It’s a response to competition … We’ve got to be creative to bring advanced products to small towns.”