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DIGITAL MANAGER MAY 16, 2000


Bundling Bargains

Take advantage of packages that tie together cheap voice services with pricier data options

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Talk is cheap, and getting cheaper. So don't be surprised if your Internet service provider tries to sell you cheap long-distance service or your phone company starts aggressively hawking its premium Web services. Providers of all kinds--from fledgling dot-coms to grown-up Baby Bells--hope to pump up profits by bundling cheap voice services with more expensive data services.

These schemes are good for their businesses, but are they good for yours? They can be. Reports abound of local phone bills being halved and high-speed Internet access being given away for free. The catch is that these deals are designed to lure you into buying costlier services such as videoconferencing and hosted software applications.

Still, tantalizing promotions are easy to find. If you're a small-business customer in New York and order Bell Atlantic Corp.'s new long-distance phone service, the Baby Bell will give you a $500 credit toward its Web services. And Teligent Inc., a phone company based in Vienna, Va., that regularly offers free DSL (digital subscriber line) modem installation and long-distance service for 5.5 cents per minute, will charge you only 4.5 cents a minute if you order its local phone service.

Exactly what you're roped into buying to get the savings varies from plan to plan. Teligent customers can get cheap local phone service--a flat rate of 30% off your current average bill--without signing up for any other plan. Of course, to receive Teligent telephone service, your building must have one of Teligent's microwave antennas bolted to its roof. That won't cost you a nickel, but your building manager will have to agree to its installation. After that, expect Teligent sales reps to nudge you toward other services.

The same is true for Urban Media Inc. in Palo Alto, Calif., a voice and data service provider. In May it begins wiring office buildings in six cities (Jacksonville, Fla.; Dallas/Fort Worth; San Francisco; Washington; Philadelphia; and Atlanta) with fiber-optic cable. If your building is wired, you can get free 200-kilobits-per-second DSL Internet service with no obligation to buy anything else.

Of course, once you sign up, expect Urban Media to approach you with a variety of Web-related services such as managed e-mail, site hosting, and secure, Internet-based networks. That's not necessarily a bad thing; just know it's coming. Fort Point Partners, a San Francisco e-commerce software developer and Urban Media's first customer, continues to order more services from the company. "Originally, we liked them just for the phone service," says Mark Corrales, Fort Point Partners' vice-president for operations. "Now we're using their wireless [local-area-network] capabilities, and we've asked them to set up the free broadband. They're also talking about videoconferencing."

Generally speaking, there is no haggling involved, just a mind-numbing array of options. If you thought choosing local phone service was a drag--voice mail? call waiting? call forwarding? unified messaging?--wait till you peruse the menu presented by your local phone company, now that it has become an Internet service provider as well. You'll have to decide what speed you want, how much online storage space you need, and whether the company should design your Web site, among other things.

For those who like to haggle, consider working with the likes of new Web-based service brokers, such as Demandline.com, Simplexity.com, and Telezoo.com. There, your small business can solicit bids for voice and data services from many of the nation's top carriers, including AT&T and MCI WorldCom Inc. Say you'd like DSL, long-distance phone service, and Web-hosting service. Simply submit your requests on the Web site and wait for the bids to come in. You can even go a few rounds with them, knocking off dollars here and there. One word of caution, though: While you may see initial bids in minutes, it may be weeks before you complete offline negotiations with telephone company sales reps.

Also, while online brokers can deliver some bargains, they do so with no regularity. The Philharmonic Assn. in Fresno, Calif., pays 40% less for its long distance than it used to, thanks to Demandline.com Inc., says executive director Robert Lippert. But the best deals a frontier writer could find requesting DSL access from several online brokers was ADSL service (asymmetric DSL) for $49 a month and more powerful SDSL (symmetric DSL) service for $150 a month. Fair prices, but no bargains.

For the most part, what brokers offer are not bargain discount bundles but one-stop shopping. But that could change soon. Telezoo.com plans to offer small-business voice and data packages starting Sept. 1, and others have promised to follow suit. "We definitely got feedback from carriers that they want to do that," says Demandline.com Chief Executive Patrick E. Burns.

Increased bundling brings up another problem, though--accountability. To provide complete service, even the largest outfits partner with other communications companies. So, if you opt for bundling, be sure to read the SLA, or service level agreement, guaranteed by your contract. The SLA should give specifics as to which provider is responsible for what--and who foots the bill should you lose service. Unfortunately, many SLAs offer restitution only for hourly online charges, not the lost sales.

By the way, care to guess why your ISP or phone company is so anxious to sign you up for more services? They know that once you subscribe to two or more, you're less likely to jump ship. And once you're locked in, they hope to sell you higher-priced data communications services.

Why, then, the bargain on Internet access? Prices for bandwidth are falling fast--so fast that a year ago Urban Media decided it couldn't make money selling it. "The real value is in the service and applications you buy," says Vic Para, vice-president for affiliate relationships and tenant services. What does this mean to your small business? Well, just remember that Urban Media and others that follow eventually need to sell something to stay in business. And they have your number.


By Kevin Ferguson in Boston

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