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Phone Companies Joining Wireless Brethren to Offer Service Packages

Posted on: Friday, 13 June 2003, 06:00 CDT

Jun. 13--If you can't beat them, join them.

That's the approach traditional phone companies seem to be taking as wireless carriers siphon customers and revenue with free long-distance and unlimited-minute plans.

SBC, Verizon, AT&T and other local phone companies are hooking up with their wireless counterparts to offer various types of "bundled" service.

Telephone companies already bundle a slew of wired services on one bill such as local, long distance and high-speed Internet. SBC, the co-owner of Cingular, also allows customers to pay for their Cingular service on the same bill as their home phone bill.

Now the traditional phone companies are taking the concept a giant step forward.

SBC recently announced a plan that would allow customers to buy one block of minutes and use those minutes for local or long-distance calls, either on their home phone or their cell phone. Basically, customers would be able to use their cell phone and home phone interchangeably and pay one rate.

"You no longer have to worry about what phone to use when," said Frank Mona, SBC California's executive director of consumer marketing.

SBC is testing this concept, which it calls MinuteShare, in Texas and hopes to introduce it in California later this year. The pricing plan would be targeted primarily at wireless customers who increasingly use their cell phone as their primary phone.

"Think of it as a Cingular plan with a kicker," he said.

AT&T also has a plan in the works with AT&T Wireless that will allow customers to pay for wired and wireless service on a single bill, getting two calling plans for the price of one. In addition, customers will be able to use some of their minutes interchangeably.

Phone companies are joining up to offer a variety of services out of economic necessity, said Jeffrey Kagan, an independent telecommunications analyst.

Long distance companies as AT&T and MCI are struggling because prices have fallen dramatically in recent years. The average revenue per minute for long-distance calls, adjusted for inflation, has fallen from $1.05 in 1970 to 10 cents in 2001.

Cellular companies have their own problems, resulting from fierce competition, Kagan said. The bottom line is that telecom companies can't be one-trick ponies.

"Companies have realized it's getting tough to make a single-service customer profitable," he said. "So not only is the bundle attractive to customers because of simplicity and savings, but it's attractive to phone companies because it creates a more profitable customer. All the competitors are getting into the act, whether or not they own wireless assets."

H. Gordon Diamond, a spokesman for AT&T, said that customers are increasingly asking for bundles, especially for wireless and traditional service.

"It is definitely something we had to offer to compete," Diamond said.

Kagan envisions a day in which there will be true integration between all telecommunications services, with customers using one phone that will work on wired phone networks at home and on cell phone networks when they leave the house.

Sound far-fetched? That type of service may be ready soon.

Verizon Avenue, a subsidiary of Verizon that provides telecommunications and Internet services to apartments and multiple-unit properties, is planning to debut such a service later this month. It will use a cordless-style phone, which is slightly larger than a typical cell phone, and will include unlimited local and long-distance service as well as calling features such as call waiting and voice mail. Customers will also get a set amount of daytime wireless minutes.

Verizon Avenue will test the service in such markets as Chicago and Philadelphia. If it's successful, Verizon plans to launch it nationwide next year.

Briana Gowling, spokeswoman for Verizon, said that the vast majority of its apartment customers have a home phone and a cell phone. Company research has shown that those customers want the simplicity of one phone.

"This is a way to marry the reliability of a home phone with the portability of a cell phone," Gowling said.

The merging of phone services is an interesting turn of events because in the past few years, large telephone companies have spun off their wireless divisions into stand-alone companies. At the time, Wall Street demanded those spinoffs because it made financial sense, Kagan said.

That attitude is changing and the various telephone companies both traditional and wireless could merge and become large, multiservice operations again.

"We are in a transition right now and they are never pretty and they are never easy," he said. "First you have to destroy what was there and then you put it back together."

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(c) 2003, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News.

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