Bundled telecom services pave way for lower prices

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Published: March 7,2005

You can’t say it about most things in business, but the fact is that prices for telecommunications services — including local phone service, long distance and online access — have continued to decline, while there has been a corresponding increase in speed for connecting to the Internet.

Companies that offer local phone service, long distance and the Internet, and companies that provide cable television service and the Internet, are offering bundled package deals that are particularly attractive.

“There are a number of telecommunication providers who offer a bundle of services that would consist of voice, local service, long distance and DSL/Internet kinds of services,” said Red Moffat, executive vice president of CommuniGroup in Jackson. “I think business customers do appreciate their ability to obtain all of their communications services from one provider. They like being able to pay with one check for local, long distance and broadband connectivity.”

How do smaller companies like CommuniGroup compete with bigger carriers like BellSouth?

Moffat said that while BellSouth is a stiff competitor in the residential market, he believes companies like his, which target their services to businesses, are in an excellent position to compete for customers.

“BellSouth is not in a position to do from a service provision standard anything different than we are able to do,” Moffat said. “Everyone out there is a potential customer, so we have a target rich environment. From a target market perspective, CommuniGroup has traditionally been more a provider of services to businesses than to consumers.”

Moffat said as prices have come down, the ability of small businesses to access the Internet has become more affordable. Most small businesses can afford broadband these days.

“And the thing is, once you have been on broadband connectivity, you’ll never go back to dial-up again because of the incredible differences in the speed,” he said.

New technologies being adopted now are expected to even further reduce communications costs for businesses and individuals.

“One of the interesting technologies today is offering of telephone service over the Internet,” Moffat said. “You’re going to see that being discussed more and more in the press. There are already customers across the nation and in Mississippi, as well, who are converting from traditional wireline services to voice over Internet protocol (VoIP). Most of the VoIP providers charge zero for long distance because the underlying economies are significantly different. We expect to be offering this soon.”

Rick Jorgensen, general director of MegaGate Broadband Inc. in Hattiesburg, said that his company competes against bigger telecommunications providers by focusing on a market segment that is neglected by most other companies.

“BellSouth doesn’t have people calling businesses with five to 10 phone lines,” Jorgensen said. “It only directly markets to big businesses. We’re going after smaller businesses where we give them a lot more personal service. Our main focus is on a bundled Internet/voice product. We can do anything you want, but the real cost benefits come in bundled offerings.”

MegaGate, which covers Jackson, Meridian and Hattiesburg all the way down to the Coast, is a competitive local exchange carrier (CLEC). While the company offers Internet access, he said calling MegaGate an Internet service provider wouldn’t be the best comparison.

“Our whole focus is on the integrated Internet/telephone product we offer to customers,” Jorgensen said. “We offer DSL, but our main product is a business service offered over T-1 lines. A T-1 line is broadband connection from the customer premises to a our network where we can provide basic Internet access and voice bundled together as a package both for provisioning and pricing. The fact that our service improves Internet access tends to make lay people think of us as ISP, but our main focus is on an integrated voice/Internet product, not just an ISP product.

“The whole competitive local exchange industry has been very accepted nationwide and we’re finding good acceptance locally. We can offer a bundled product at a substantial discount.”

Melany Stroupe, public relations manager for Cableone.net, said that her company also has a lot of customers who like the bundled package of Internet and cable television.

“In general, absolutely we have seen dramatic results from that pocket of service,” Stroupe said. “When people decide to go with a bundled package, they tend to stay. That is probably our most stable customer, someone who gets both cable and Internet.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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