AT & T Promo: Free Local-Phone Service

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In an aggressive move to ramp up market share for its local telephone service, AT & T Broadband late last week started offering several months of free phone access to new cable-telephony customers in 10 markets.

Subscribers who sign up between Sept. 1 and Nov. 15 will receive free local service through Jan. 31, as well as free installation and free or discounted long distance, depending on the type of plan selected, spokeswoman Sarah Duisik said.

The company's standard cable-telephony offer is free installation and free service for the first month.

Initial markets for the promotion include San Francisco; Chicago; Dallas; Denver; Hartford, Conn.; Pittsburgh; Salt Lake City; Seattle; St. Louis; and Portland, Ore.

AT & T Broadband will use cross-channel spots, newspaper ads, bill inserts, direct mail and telemarketing in those markets to help promote the offer. Former MediaOne Group Inc. systems were not initially included in the promotion.

Some see the promotional push as a way for AT & T Broadband to meet its ambitious projection of at least 500,000 local telephony customers by the end of 2000, made earlier this year.

With the new promotion, signing on customers should be a "slam dunk," Atlanta-based telecommunications analyst Jeff Kagan said. "The only question that remains is, will they keep them?"

Boston-based Dove Associates Inc. managing director Bob Davis called the promotion "a great move" and a good way to drive subscriber numbers. "We know people are very price-sensitive with phone service," he added.

The price-based promotion will go a long way toward helping AT & T Corp. to dispel its image with consumers as a high-cost long-distance provider, Denver-based B.G. Marketing Inc. president Barbara Sullivan-Roehrig said.

But Kagan pointed to the long-distance phone wars when warning about the dangers of competing strictly on price.

In the earlier price wars, Kagan said, AT & T "tried to win [long-distance] customers back with checks, but that didn't work because they left for the next best check."

Davis said he believes that if AT & T can get consumers to switch their local phone service, the likelihood that they'll switch back again to their old provider is low, especially if they have to wait at home for a service call.

"The more pain in switching, the less churn" there will be, Kagan conceded. But he said relying on inertia to keep the new local telephone customers would not be enough.

AT & T must "think of another reason to get them to stay," Kagan said.

Sullivan-Roehrig called AT & T one of the better retention marketers in the business. "AT & T has learned a really good lesson in long distance on how to retain customers," she said, predicting that the company would find ways to retain and even upgrade its telephony customers before their free service period runs out.

Davis expects AT & T to take some market share with the new promotion. The only risks AT & T faces is if new customers experience problems with the product or have to wait too long for installation, especially with the clock ticking on the number of days of free telephone service left.

Of course, how long is too long is strictly a matter of individual consumer perception.

"I think the consumer can be held at bay for two weeks," Davis said.

The MSO can afford to wait to install the new service only until "the customer starts screaming," Kagan said, adding, "customers have different thresholds for pain."

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