Buyers Don't Want Bundled Services

Fortnightly Magazine - November 15 1997
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While some utilities would like to sell customers electricity bundled with local and long-distance telephone and cable television, consumers may not be interested, according to a recent survey.

The RKS National Residential Customer Assessment found that residential customers view bundled service offerings with suspicion.

"These latest findings call into question the concept of cross-functional mergers (em the idea of combining a variety of energy and communications services under a single brand for the residential market," said David J. Reichman, RKS research president. Reichman added that residential customers want more, not fewer, choices.

The most affluent and well-educated customers are the least interested in purchasing bundled services from a single provider.

If a customer did want bundled services, then one-third would purchase it from their electric utility. Nineteen percent would choose their local telephone company; 12 percent would choose their long-distance provider. Only 4 percent would seek such services from their cable company.

Although customers preferred their electric utility for bundled services, only 50 percent would actually purchase those services. That figure dips to 41 percent among affluent college graduate heads of households.

Reichman questioned attempts by electric and gas utilities to enter the telecommunications field. Most don't have the expertise, the capital and don't know how to advertise, he said. "Why try to create the super monopoly when customers are aware of choice?"

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