News

Bundling, Marketing Drive Telephony

7/23/2000 8:00 PM Eastern

Although hybrid fiber-coaxial telephony services are just beginning to make an impact in the consumer market, how those services are marketed and bundled could push the needle to extremely lucrative heights, panelists told attendees at the Cable & Telecommunications Association for Marketing's CTAM Summit last week.

By employing an aggressive mix of marketing and service bundling, The Strategis Group vice president Michael Krier said, the cable industry could approach $2.7 billion in circuit-switched and Internet-protocol telephony service revenue by 2005.

But cable has a long row to hoe before that figure is reached: The industry will pull down a mere $133 million in circuit-switched revenue this year, rising to $339 million by the end of 2001, he added.

One company that has trained its sights on that market is AT & T Broadband, which expects its cable-telephony-subscriber rolls to top 400,000 by year's end.

Even with MediaOne Group Inc.'s HFC-telephony markets and subscribers in the mix, AT & T Broadband plans to employ an aggressive marketing regimen to reach that goal, said vice president of marketing and sales for telephony Nancy McGee, who also filled a similar role at MediaOne.

That diet will continue to include heavy doses of media advertising and "personal marketing" strategies, such as direct door-to-door sales. "We usually do traditional tactics, then sweep in with direct sales," McGee said. "We have to tell a story before we can switch customers."

Earlier this year, AT & T Broadband said direct sales will ultimately account for between 30 percent and 35 percent of telephony sales.

McGee said AT & T Broadband's aggressive HFC-telephony plan is to drive penetration levels to roughly 10 percent in marketed areas.

If all goes according to plan, the company's ambition is to serve as much more than just a thorn in the sides of incumbent local-exchange carriers. "Our goal is to win market share from competitors," and not to become merely a niche service, McGee added.

While aggressive marketing will aid cable's moves into the telephony arena, service bundling is expected to build a following, as well.

Indeed, 84 percent of consumers want local phone in their bundle, Krier said, citing a recent Strategis Group study.

And more consumers consider cable as a viable telephony option. For example, 27.7 percent of the respondents said they were "extremely interested" or "very interested" in receiving local phone service from their local cable operator. About 39 percent were "somewhat interested," and 32.8 percent were "not too interested" or "not interested."

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