News

Operators Use Calling Plans To Ring Up, Keep Customers

11/03/2006 7:00 PM Eastern

In an effort to attract and retain Mexican-American customers, an increasing number of cable operators — including Comcast, Cox Communications and Qwest Communications International — are offering discounted calling plans to Mexico.

Charter Communications is taking the strategy one step further and is the first operator to offer fixed-rate unlimited calling to the country. The company debuted the offer in southern California in July and launched it in Fort Worth, Texas, and Reno, Nev. in early September.

“What we could have done was come out with a very cost effective, a very competitive rate per minute to compete with calling cards or other providers. We decided to extend the value proposition that we’d already put in place for the baseline product and that was the notion of unlimited,” Charter Telephone senior vice president and general manager Ted Schremp said. “The thinking was let’s just take that same simple concept and extend it to Mexico.”

The service is $30 a month on top of a $39.99 monthly charge for unlimited calls throughout the U.S., including Puerto Rico. The telephone service can be sold individually or as part of a bundle. Subscribers who purchase a double- or triple-play package receive discounts.

Charter, with a heavily Latino subscriber base in California, Nevada and Texas, chose Mexico as its first Latin American destination because many of its Hispanic customers are of Mexican descent.

The company believes the steady flow of Mexican immigrants into the U.S. creates a strong demand for calling plans between the two countries.

Schremp did not provide data about the service’s performance so far.

“It is very early. One of the challenges that we are facing is just generating a level of awareness in the market that the product even exists,” he said.

In September, Qwest launched its own discounted calling plan to Mexico, charging seven cents per minute.

The company is still trying to “figure it out from a marketing perspective,” Qwest director of Hispanic marketing Hector Placencia said.

The company’s research suggested that Hispanic customer satisfaction with a long-distance calling plan would likely drive additional business, including broadband and video. “[The phone plan] is all important. When they have a good international plan, that becomes more and more the carrier they want to use for other products and services,” Placencia said.

This differs from the general market, according to Placencia, where broadband access drives the addition of telephony and video. “Long-distance has been a very sticky process for us,” he said.

Qwest offers wireless service as well. Placencia said that “seems to be our strength and that is [cable’s] weakness.” He also touted existing efforts such as 22 kiosks located in a supermarket chain that targets Latinos, Spanish-language advertising and bilingual call centers.

Placencia is “pleasantly surprised” that cable operators in his service areas have not been more aggressive in developing and promoting Mexico calling plans.

Yet, during October’s Hispanic Television Summit in New York, Cablevision Systems, Comcast, Cox and Time Warner Cable all talked up their respective overseas calling rates.

“That is one of those areas that we are very excited about,” Comcast vice president of marketing John Vonk said. He added that triple-play customers tend to remain longer with the same provider.

For operators, given the traditionally high churn rate among Hispanic tier subscribers, that could well end up being their biggest motivation for promoting discounted overseas phone service.

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