Study reveals strong demand for bundled services

Two new reports by e-data resources company Strategis Group (Washington, DC) reveal strong interest in bundled consumer and business telecommunications services among consumers, small office/home office, and small to large businesses.

Strategis analysts surveyed consumers and small and large business firms to gauge interest in seven communications services, including local and long-distance telephone, cable TV, satellite TV, Internet access, cellular service, and paging. Nearly two-thirds of businesses (66%) and consumers (63%) expressed an interest in purchasing bundles of two or more services.

"Telecom bundling is the new reality of the market. Consumers demand it, businesses demand it, and operators are finally beginning to provide the service. It's now a race among carriers to become the customer's one-stop communications partner," says James Mendelson, Strategis Group analyst and lead author of the reports.

Of the consumers who responded to the Strategis survey, 93% expressed interest in bundles of two or more services and 25% were interested in a bundle of six services. Local and long-distance telephone was the most popular service, appearing on the list of preferred services for 78% of the respondents.

About two-thirds of the small to large businesses surveyed were interested in bundles of two or more services; one-third of those firms preferred a bundle that includes local and long-distance telephone, cellular/PCS, paging, Internet access, and enhanced data services. About one-fifth of the respondents preferred a bundle of two or three services, while another 20% expressed a preference in bundles of four or five.

"Quality perceptions are especially important in marketing bundled telecommunications services," says Mendelson. "Bundling all or most of your services from one carrier demands a certain level of trust from the customer."

As more and more operators begin to offer bundle services, customers are more apt to trust the carriers with which they're familiar, such as AT&T, Sprint, and regional Bell operating companies. "This presents a challenge for the lesser-known competitive local-exchange carriers, such as Nextlink or Winstar, who are trying to compete in the bundled marketplace," says Mendelson.

AT&T leads the market in terms of quality perceptions; 35% of business telecommunications managers declared AT&T's services "excellent." Bell Atlantic broke through the long-distance carriers' hold on the top three (AT&T, MCI WorldCom, and Sprint) to place second in quality perceptions, up from its fourth-place rank in 1998.

Stategis Group's "Branding and Bundling: Business Telecom Services" rates the following service providers: America Online; Ameritech; AT&T; Bell Atlantic; BellSouth; Concentric; E.Spire; Epoc; Frontier; GTE; Intermedia; MCI WorldCom; Nextlink; Pacific Bell; PSINet; Qwest/LCI; SBC; Sprint; US West; UUNet; and Winstar.

For more information or a copy of the reports, call (202) 530-7500 or visit www.StrategisGroup.com.

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