Is Bundling Your Entertainment Service Worth $100?

Late last week, the Wall Street Journal published an article on how Comcast was doing with regards to their telephone VOIP and internet service rollout. While the article stressed how investors were concerned about them spending too much cash on capital expenditure, I was more interested in the number of sign ups they have had for these services.

The reason I was interested in their numbers was because I felt that their VOIP and Internet Connection Service did not really offer as much value as their competitors. In the fourth quarter of 2006, Comcast added 481,000 new phone subscribers for a total of 2.5 million. The company’s high-speed Internet business also grew sharply, adding 488,000 customers for a total of 11.5 million.

Having subscribed to Comcasts’ cable service (rather than Direct TV – which I should have), I constantly get mails and calls to try their other services. For a while, I used Comcast as my internet service provider. I was paying about $45.00 a month for the highest speed connection – about 5mbps (I think). However, I was not really satisfied with the connection because at times, my connection would slow to a crawl or my VOIP phone would just hang! This, I was told, was due to the fact that I was “sharing lines”.

When Verizon came knocking on my door offering a dedicated fibre optic line to my house for $45.00 a month, but with a download speed of 15mbps, I switched immediately.

For my phone, I have always used Vonage, as they are cheaper than any land line around. But once again, I keep getting mails from both Verizon and Comcast asking me to sign up for their own VOIP service. For comcast, the rate will be $33.00 a month for their Comcast VOIP service if you bundle it with their cable and internet service. If you do not bundle it, the price will be $44.99 a month. To me this is simply ridiculous. Even when you bundle it, it still cost more than Vonage!

Verizon’s VoiceWing is much more reasonable. For 500 minutes a month, the rate is $19.95 a month. For unlimited calling, the rate is $24.99 a month, the same as Vonage. For multiple lines (ie 2 lines), the rate is $44.95 a month. Since, I Verizon will not beat my Vonage, I see no reason to change.

But what puzzles me is that existing comcast customer are willing to pay about $9.00 more on a Comcast VOIP phone (or $108 a year) when cheaper alternatives like Vonage are around. I just don’t get it, there are lower alternatives around and still these companies have the cheek to tell you what great value their service is. In just one quarter, Comcast gained 481,000 in new phone subscribers even though Vonage and Verizon offer a much cheaper alternative! Don’t these consumers do any research?

Is bundling your service and having just one statement worth $100 a year? I don’t think so.