Communications Companies Vie For Bundled Services
The race is on to sign up consumers to “bundled entertainment and communications services”, with brands such as BT, Sky, MSN and Carphone Warehouse encroaching on each other’s traditional territories whilst vying for customers to stay loyal, according to Continental Research’s Autumn 2006 Convergence Report.
Myring added: “TV companies are moving into telecoms services and fixed and mobile operators are moving into entertainment and broadband. Some are doing this organically, others by acquisition. What were previously distinct market sectors are merging into one, with all players trying to leverage new services from their existing customer base.
“But is convergence or bundling actually what people want? Do consumers actually want to receive key services (such as ISP, fixed line phone, TV channels and mobile phone) through one supplier?”
The evidence suggests that broadly speaking bundling is something that does appeal to consumers. Only 15% are against receiving bundled services. The majority are either slightly in favour, or indifferent. The obvious conclusion is that if companies can put together an attractive bundled package then there will be significant consumer interest.
In addition bundling can help to reduce churn amongst high spending customers. Currently 17% of mobile owners are likely to switch mobile network in the next year. But, when asked about the likelihood of switching network if the offering of free broadband for home internet access was an incentive to stay with a current mobile provider, only 54% still say they are likely to switch. Even if it loses money ‘free’ broadband could still be a valuable tool if it helps to reduce churn amongst high spending customers.
Myring added: “Consumers are open towards bundling, however there are still areas that are open to question. How appealing will individual brands be across a range of sectors, after all a strong brand name in one sector may not translate well to another.” This is a particular issue in the provision of broadband where Sky, Orange and Carphone Warehouse have been promoting ‘free’ broadband to their customers.
To determine the relative appeal of a number of brands, internet users were asked to rate a selection of companies as potential broadband providers.
Encouragingly for Sky, it is viewed almost as positively as an established broadband provider (NTL/ Telewest) and more so than another (Virgin). Neither Carphone Warehouse nor Orange score very highly as an ISP provider. The relatively low score for Orange is particularly interesting given that Wanadoo (an established ISP) has been rebranded as Orange.
It will be difficult for companies to become credible in all convergent technologies. Brands like Sky, BT and Virgin that have a brand name with appeal beyond its traditional area of expertise are the companies that look best placed to succeed.