Comcast Corp.'s Comcast Cable Communications Inc. isset to launch its first Comcast-branded long-distance phone service in Detroit this week,marking another entry in cable's slow but steady invasion into competitivetelecommunications markets.
Next month, Comcast will expand the long-distance service-- which offers a 9-cent-per-minute interstate rate for customers who also subscribe toComcast cable -- to its Philadelphia market. The discounted rate will also be available toPhiladelphia-area Comcast cellular-phone customers.
By the end of June, Comcast expects to roll out thelong-distance offer nationally to more than 4.4 million Comcast Cable customers.
Andy Addis, vice president of marketing, new products forComcast, said the company chose the Detroit market for the launch in part because"we're fighting a competitive battle there. Anything that we can do to build thevalue proposition helps us."
Ameritech New Media, regional Bell operating companyAmeritech Corp.'s video arm, offers a competitive cable service in the Detroit area.
Today, Comcast, like most cable companies that provide"bundled" or "packaged" services, awards discounts to customers whoselect multiple services from the company, but it does not yet offer a single-billsolution. Cable operators and analysts agreed that integrated billing will become crucialas customers start to demand it and telephone-company competition supplies it.
"In order to be a player five or 10 years from now,these companies have to offer bundles," said Jeffrey Kagan, analyst withAtlanta-based Kagan Telecom Associates. "Consumers will think that it'sprehistoric to deal with separate companies."
Barbara Sullivan, president of Denver-based B.G. MarketingInc., agreed. In this decade and the next, she said, "we're just more and moretime-poor."
Research by MediaOne has shown that many consumers preferto pay a single bill. "People don't necessarily want to be writing out five orsix checks for cable, phone and Internet services," said MediaOne spokesman DaveWoods. "Consolidation is where our customers are headed right now."
Media One offers local phone service in Atlanta, and itwill add two markets later this year.
Integrated billing will have to catch up in the yearsahead. Cable operators across the country are already testing and launchingmultiple-service offerings.
Cablevision Lightpath Inc., a division of CablevisionSystems Corp., has signed up about 1,000 businesses for its local and regional phonebusiness on Long Island, N.Y., in the past two years. Late last year, the company begantesting a residential phone service. It recently made the service available to about 5,000homes there, and it is marketing the service door-to-door.
Connecticut will be the next market for CablevisionLightpath.
David Livengood, director of marketing, data products forCox Communications Inc.'s Cox @Home, said company research shows that "there area large number of people out there that are interested in bundled services and --ironically -- an equally large number who want to keep their bills separate."
In addition to analog cable, Cox offers Internet,digital-telephone and digital-television services in select markets, such as OrangeCounty, Calif. Over time, said Livengood, Cox will give customers a choice of separate orintegrated billing, perhaps by the last quarter of 1999. Cox customers already receivediscounts for multiple services.
Livengood said integrated billing would requireadvancements to the billing engine. Cox is developing a new system through its in-houseMIS (management information systems) department.
Mike McGrail, president and general manager of CableDataInc., which supplies billing systems for cable companies, said requirements for billingsystems become much more complex as cable operators move from offering one service tomultiple services. He was speaking at Kagan Associates' Cable TV Values & Financeseminar in New York last week.
The new billing systems would need to adapt quickly tochanging telephone prices, which may need to be updated week-to-week in some cases,McGrail said.
Despite the challenges involved in moving to integratedbilling, doing so offers payoffs to cable operators. The service rewards time-constrainedcustomers, and it could help to reduce churn among customers who don't want to breakup their communications and cable packages.
"Customers buy the convenience right now, even ifthere isn't a discount," said Kagan.
In the days of bundled services, the stakes are higher inthe fight to get and keep market share for a full package of communications services. Somesay that telcos may have an edge.
"People have been using the phone companies for 100years," Kagan said, "and phone companies are reliable." He added thatbrand-name recognition goes a long way toward keeping subscribers loyal.
"You've got to have a master brand," Kagansaid. "My cable company has changed hands three times in the past few years. Brandname goes right down the drain then."
When cable companies breaking into the telephone marketpromote low prices, McGrail said, telcos are sure to follow, driving prices down again.
"Telephone companies may be large and sleepy," hesaid, "but they're not run by large and sleepy people. They will react."
And telephone companies are not just launching their owncompeting video services. Some are partnering with DirecTv Inc., which has built a strongnational brand of its own, to co-market the direct-broadcast satellite service and tointegrate its video programming onto the telephone bill.