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Phone, Cable Subscribers Face More Competition, Confusion Ahead

Posted on: Thursday, 29 January 2004, 06:00 CST

Jan. 29--Your telephone company wants to be your cable company. Your cable company may already be your telephone company. And your long-distance company may soon provide your local phone service.

Sound confusing?

Verizon Communications and AT&T are announcing separate plans to invade their competitors' strongholds, adding more choices -- and more confusion -- to the complicated mix of telecommunications options.

Long-distance giant AT&T said yesterday it has begun offering local telephone service to residential customers in Rhode Island, challenging the dominant position held by Verizon Communications.

And today, Verizon plans to announce another foray into television through a marketing agreement with satellite provider DirecTV to customers in Rhode Island. That move will challenge Cox Communications' powerful position in the cable market.

The new offerings will give more options for telephone and cable TV packages to Rhode Islanders, who already enjoy one of the most competitive telecommunications markets in the United States.

However, the new deals will likely save money only for customers who buy a slew of high-end services in one big package.

Those who don't want -- or can't afford -- pricey services, such as digital cable, or unlimited calling plans, may do better by picking and choosing less expensive options that already exist.

Verizon is scheduled to announce today that it is going after Cox's business by bundling DirecTV service with its telephone and Internet offerings.

Verizon has partnered with the El Segundo, Calif.-based satellite company to offer discounts of up to $6 a month if customers also subscribe to other Verizon services. DirecTV will handle installation, which is free for up to three rooms.

Verizon's high-end package -- which includes unlimited local and long-distance calling, high-speed DSL Internet service and DirecTV's Total Choice Plus with local broadcast channels -- is $118.89 a month. That is a savings of $11 a month if the services were purchased separately, Verizon said.

By comparison, Cox offers similar packages that range from $129.24 to $134.24, depending on which digital TV programming option a customer chooses. That price includes a $10 bundle discount for subscribing to three different Cox services.

Verizon said there are several other options besides the $118 package that include fewer features, but cost less. And Cox said it has packages that combine video, Internet and telephone services that start as low as $48.80 a month.

This is the second time that Verizon has partnered with DirecTV. It had a similar marketing agreement in 1999 that fizzled out. Executives from both companies say they expect the latest deal to be more successful because satellite companies can now offer local channels thanks to new federal regulations. And they say the price of satellite service installation has dropped to virtually nothing.

There are some caveats to the Verizon deal. DSL service is available in only 54 percent of Verizon's territory in the state, whereas Cox's Internet service is available throughout its service area -- 38 of Rhode Island's 39 communities.

And the Verizon video-telephone package will be billed separately, at least initially. The company plans to have a combined bill by this summer.

Finally, the discount is available only to new customers of DirecTV, according to Steven Cox, executive vice president of sales, distribution, and customer acquisition for DirecTV. The companies are considering a different promotion for existing customers that may include similar discounts, he said.

Verizon said that it is rolling out the DirecTV package in Rhode Island first. It will be available in other New England states in a matter of weeks.

The other significant announcement by AT&T means more choices for local phone service.

AT&T's least expensive local service plan is $26.95 a month, which is more expensive than low-end plans offered by both Verizon ($18.26) and Cox ($11.95). However, AT&T's plan allows customers to add two extra features from a list that includes call waiting, caller ID, call forwarding, and others. A $28.95 plan offers a choice of three extra features.

AT&T has also joined Cox, Verizon and MCI in offering an unlimited calling plan that includes local and long-distance calling. AT&T's One Rate USA is $54.95 a month. Verizon charges the same price for Freedom Unlimited; Cox's Unlimited Connection is $49.95; MCI's Network Complete is $55.99.

AT&T has long offered long-distance service in the state. It expanded into local phone service here for business customers in the 1990s. It had stayed away from the less lucrative market of local residential service until yesterday.

The company is offering local service by reselling telephone lines operated by Verizon Communications. Resellers rent the lines at wholesale prices and resell them to customers, typically at a low-profit margin. The reseller usually handles customer service and billing, and alerts Verizon if repairs are needed to the leased lines.

Besides Rhode Island, AT&T launched local service yesterday in Maine, New Hampshire, Delaware, West Virginia and Nevada, the company said. The company now offers local service in 35 states, including New England, except Connecticut.

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To see more of the Providence Journal, or to subscribe to the newspaper, go to http://www.projo.com

(c) 2004, Providence Journal, R.I. Distributed by Knight Ridder/Tribune Business News.

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