Bundling: Service Provider Strategies to Capture the Consumer

Published by: In-Stat

Published: Sep. 1, 2002 - 30 Pages

Table of Contents

Executive Summary

Methodology

Introduction

Bundling Definition

Benefits of Bundling

Consumer Survey

Service Provider Profiles

RBOCs

BellSouth

Qwest

SBC

Verizon

Cable MSOs

Cox Communications

AT&T Broadband

IXCs

AT&T

MCI (WorldCom)

Sprint

US Bundling Revenues Forecast

Conclusion

List of Tables

Table 1. BellSouth "Answers" Example of Bundled Pricing (local voice for Georgia)

Table 2. Verizon "Veriations All" Example of Bundled Pricing (local voice for downstate New York, including New York City)

Table 3. Cox Communications "Digital Suite" Bundled Pricing (monthly prices) 2

Table 4. Forecast of US Bundled Services Revenues for Residential Consumers: 2002 - 2006 (US$ B) (includes bundles of two or more of local phone, long distance, wireless, and Internet services)

List of Figures

Figure 1. US Residential Consumers' Interest in Bundle of Local Phone, Long Distance (L-D), and Internet Services from a Single Service Provider

Figure 2. Service Provider for Local Phone Service Used by Residential Consumers in Survey

Figure 3. Residential Consumers Who Use Local Phone or Long Distance Service Provider (S.P.) as Internet Service Provider (ISP)

Figure 4. Percent of Residential Consumers Who Purchase Internet Service from Local Phone Service Provider for Local Telephone Company vs. Cable Company as Local Phone Service Provider

Figure 5. Primary Reason Consumers Purchase Internet Service and Local Phone or Long Distance from the Same Service Provider

Figure 6. One Bill as Primary Reason for Purchasing Internet Service and Local Phone or Long Distance from the Same Service Provider, by Annual Income of Household

Figure 7. Residential Consumers Purchasing Internet Service from Local Phone or Long Distance (L-D) Service Provider Within the Next Two Years

Figure 8. Residential Consumers Likely to Purchase Long Distance from Local Phone Service Provider if Charged on a Single Bill

Figure 9. Interest in Bundle of Local Phone, Long Distance, and Internet Services from a Single Service Provider (assuming single bill and discounted pricing)

Figure 10. Interest in Bundle of Local Phone/Long Distance/Internet Services, by Age Group

Figure 11. Interest in Bundle of Local Phone/Long Distance/Internet Services, by Annual Household Income

Figure 12. Interest in Bundle of Local Phone/Long Distance/Internet Services, by Area

Figure 13. Verizon's Estimate of Percentage Shares of Each Type of Bundle under the Veriations program

Figure 14. 2002 Market Shares of US Bundled Services Revenues for Residential Consumers (includes bundles of two or more of local phone, long distance, wireless, and Internet services)

Abstract

The RBOCs have announced major new services bundling programs for residential consumers in 2002. This report identifies the benefits to consumers and service providers of bundling. A survey of 961 US households was conducted to determine consumer interests in different types of services bundles. The latest bundled offerings and strategies of the RBOCs, cable MSOs, and IXCs are examined. These include bundles of local phone, long distance, wireless, Internet, and television services. The report concludes with estimated market shares for the various service provider groups of the US services bundling market in 2002, and a five-year forecast of US bundled services revenues.

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