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Cable Technology Feature Article

September 28, 2009

U-Verse Packaging Shows Shift of Voice Value

By Gary Kim, Contributing Editor

Consistent with its previously-announced strategy of introducing VoIP service once it has its new "fiber to the node" network installed, AT&T is introducing VoIP service for U-verse customers in the Atlanta market, and the packaging illustrates the ways service providers can alter user perceptions of value.
AT&T (News - Alert) U-verse TV, U-verse High Speed Internet and U-verse Voice services are available today in parts of metro Atlanta and surrounding areas including, Athens/Clarke, Barrow, Butts, Camden, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Floyd, Forsyth, Fulton, Glynn, Gordon, Gwinnett, Hall, Henry, Jackson, Jasper, Lamar, Madison, Newton, Oconee, Paulding, Pike, Rockdale, Spalding, Troup and Walton Counties.
AT&T officials have said in the past that once U-verse VoIP service is introduced, about 65 percent of customers sign up for it. Many customers appear to prefer keeping their traditional voice service, though.
But AT&T executives also have noted that 60 percent of U-verse TV customers are taken away from cable operators, and 90 percent of new U-verse TV customers also buy broadband Internet access service as well.
U-verse "Voice Unlimited" includes unlimited nationwide minutes to any location in the U.S., Canada or U.S. territories for $30 a month, while U-verse "Voice 250" includes 250 "Call Anywhere" minutes to any location in the U.S. or U.S. territories for $25 a month.
But those prices are for stand-alone service. Triple-play bundles including unlimited U-verse voice service start at about $100 a month on a promotional basis, so the arbitrary retail price for VoIP is hard to pin down, precisely.
Customers who buy HDTV and DVR service will pay about $25 a month just for those two features, on top of a channel plan, for example, and AT&T also says it has a very-high attach rate for broadband access as well.
The point is that, for a majority of customers, landline voice is a part of a larger package of values with a retail price that can be judged to be $30, exclusive of taxes and fees, but for which the "attributed" price is less than that, and hard to calculate precisely.
All of that points up to the marketing value of bundles. Consumers rightly can conclude they will save money by buying three or four services from one provider, in a bundle. Such bundles also allow providers to merchandise services, obscuring the actual "retail price" of any single component.
As a practical matter, the merchandising largely is a matter of accounting entries, as service providers do not generally report discrete voice, video and broadband access "average revenue per user."
Features include a single, combined voice mailbox for AT&T U-verse Voice and AT&T wireless messages; U-verse Central, an online portal to manage call preferences and settings from any PC; an online voice mailbox; the ability to view call logs on a PC or recent incoming calls on a TV screen; the ability to initiate a call from your PC or TV using Click to Call.
The point is that there remains much more room for packaging of landline voice and changing value perceptions than generally is the case for legacy voice. By offering the 250-minute usage plan for $25, plus the "unlimited" version for $5 more, AT&T is inviting customers to compare the value of the two plans and conclude that the unlimited plan offers lots more value.
Consumers might further conclude that the incremental value of landline voice is not much, when anchor video and broadband access services are purchased, compared to stand-alone voice prices.
A second phone line, which shares the primary line's calling plan, can be added for $15 a month, and each plan features competitive international rates with no recurring monthly charge.
Professional installation is included for new AT&T U-verse customers who order U-verse TV and voice.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Amy Tierney