TELECOMFUSED? DO PACKAGES SAVE A BUNDLE?

Byline: BARBARA CORREA

Staff Writer

Are your telecom bills making your head spin? They should be.

Just the basics -- local phone service, long distance, cell phones, Internet and television channels -- make up a dizzying five bills every month.

To simplify things, big phone and cable companies are aggressively promoting bundles of services that appear to offer savings -- at least on the surface.

But consumer advocates warn shoppers: Read the fine print before signing up.

"What appears to be a great deal might at the end of the day cost you more than individual services," said Jeannine Kenney, senior policy analyst at the advocacy group Consumers Union. That's because most of the bundled packages are for new customers only, and many expire after an introductory period. After that, prices jump.

Woodland Hills accountant Eric Vancronk said a combination of cable TV and digital phone service was $120 a month when he signed up with Time Warner recently. But after six months, the price jumped to $150 a month, he said. Vancronk knows what the long-term price will be, but a lot of people who sign on may not realize the promotional price is temporary.

Another charge customers may not be aware of when they sign up is equipment rental costs, like TV set cable boxes. Finally, consumers must pay attention to which promotions are only available online. For instance, AT&T's $39.94 per month all-distance phone deal has to be ordered online. And price quotes never include taxes and fees, which add up to a lot for phone service.

"It becomes very difficult for consumers to decipher what they're paying," Kenney said.

Entrepreneur Patrick Oborn started two telecommunication companies, CheapRates.com, a price comparison service, and Telarus, a commercial-use broadband sales company.

"Consumers have been ripped in a million pieces," Oborn said. "In the space of four or five years, we went from just having phone service to having phone, DSL, wireless."

Add to that Internet, or digital, phone service. Oborn said his sister-in-law, who is not technologically savvy, recently watched a commercial for Vonage, the Internet phone company, and had no idea what it was selling.

Packaging services is not new. But with the merger of SBC and AT&T last summer, the entrance of Time Warner Cable into the Los Angeles market, and the introduction of digital phone service, cable and telecom companies are launching more aggressive promotions.

AT&T's Quad Pack includes Yahoo high-speed Internet, TV channels through Dish Network, Cingular wireless and nationwide calling for about $130 a month to start.

Time Warner Cable, which took over most of the L.A. market as part of its acquisition last year of Adelphia Cable, is offering a triple-play package of cable TV, high-speed Internet and unlimited nationwide digital phone over a broadband line for as low as $110.

Currently, the average U.S. household spends about $43 a month for local and long-distance phone service, $23 for Internet, $63 for cell phone and $51 for cable or satellite TV, according to TNS Telecoms, a research firm that focuses on telecommunications services.

That totals about $180 a month, up from $125 in 2000.

To compare, AT&T's individual service prices are $39.99 for local and long distance, $19.99 for the cheapest high-speed Internet connection, $39.99 for cell phone service, and $30.97 for basic cable.

But that is for fewer cell phone minutes or cable channels than most people want, and it doesn't include fees and equipment costs.

Easy bundles

The bundles do offer convenience, especially when they make customer service easier.

That's one area in which the cable companies have an advantage over the telecommunication companies, said Oborn.

"Verizon has all the separate departments, and at AT&T there's such a goulash. At least with the cables, it's just one company," he said.

Geography can make a lot of the decisions about telecom services for consumers. For instance, residents of Beaumont, in Riverside County, were the first in California to get access last year to Verizon's fiber-optic television service, FiOS.

People who buy homes in The Preserve, a new development in Chino, have fiber-optic cable hookups at their doors. Fiber optics offer better bandwidth and clarity than traditional copper cable.

Charter Communications, which serves parts of the Inland Empire including San Bernardino County, offers extended cable and 3Mbps high-speed Internet for less than $60 a month. The company is also preparing to offer digital phone service to its entire coverage area, said Craig Watson, spokesman for Charter's western division, based in Long Beach.

If cable firm and telephone company offerings don't fit what a consumer is looking for, there are plenty of independents competing for customers in all categories.

The main battleground is in the Internet phone space. Vonage is the leader in Internet phone, which runs on the same broadband or DSL line used to connect to the Internet. Other providers are SunRocket and Packet8.

Jeff Krumholz, a self-described techie, switched from AT&T phone service to Vonage about a month ago. He said he was paying $150 a month for AT&T.

"It's like, 'super size me,'" he said. "They get you on the features."

For just under $25 a month, Vonage offers unlimited local and long-distance calling. The catch, said Krumholz, is that the customer still has to pay for an Internet connection. Still, he said he's saving a bundle, and so far, Vonage seems to be working fine.

Besides the attractive price, Internet phone is completely portable and works through an adaptor that users can connect to their PCs, fax machines or regular telephones. Despite its appeal, people are having a hard time separating themselves from wired phone lines.

Ringing computers

In a survey done last summer by TNS Telecoms, respondents picked the wired phone line as the single most important communications product in the household. Cell phones and high-speed Internet tied for second place.

There seems to be a substantial fear factor connected to cutting the phone cord, in part because alternative technology is new, and most people have heard a few horror stories. Internet phone systems access emergency service 911 systems differently, and that has stirred controversy. Last March, a Minnesota homeowner claimed that Vonage was at fault for 911 putting him on hold while his house burned to the ground. (Vonage says its 911 service is more than adequate.)

"There's no reason not to get Vonage, except that you need to accept what you're getting," said Jonathon Fishman, founder of Ben's Ranch, a personal technology company in Santa Monica that makes house calls.

"You tolerate an occasional issue with Vonage, and you get enormous cost savings."

Those occasional issues can mean a dropped call or static on the line, depending on the quality of the Internet connection.

"I think it's a great second line," said Elizabeth Rodgers, a Ben's Ranch spokeswoman and Fishman's spouse. "For sure, it's cheaper."

But Rodgers said she had trouble transferring her phone number between SunRocket and Comcast.

"I had a Comcast number and had to switch it to SunRocket. When I wanted to switch it back it took literally 15 hours on the phone. I had a newborn at the time. It was a nightmare."

Still, Fishman said Internet phone is here to stay. "Having a headset on a computer to make and receive calls will evolve into a mainstream solution as the hardware matures."

barbara.correa(at)dailynews.com

[phone]

CAPTION(S):

box

Box:

Consumer spending on Telecom

Source: TNS Telecoms

Daily News