Bundle deals for phone, TV and internet

The problem with bargains is that everyone loves them. It makes a lot of sense for clever marketers to persuade people they’re offering one.

The idea is simple; they tell you that by buying your services together you’ll save money – so, for example, someone might want a mobile phone and broadband from one source as long as they’re inexpensive and they work. Put TV in and the savings are still bigger.

Or are they? In this article we’ll look at ways of checking that those savings are real rather than just convenient.

This isn’t cynicism, it’s a sober reflection that those companies offering what the trade calls ‘bundled’ services are, quite reasonably, there to get good value for their shareholders rather than for their customers. This means that the deals they offer may or may not be in your best interests.

Problem with ‘free’ services
It all started when Carphone Warehouse came up with the idea of offering ‘free’ broadband services within a mobile phone or landline phone contract a year ago. The offer was simple enough; using the Talktalk service, you could get unlimited local and national calls for £20.99 a month and they would add a capped broadband service as well.

This was magnificent in principle, and became the first so-called ‘double-play’ contract on offer in this country. ‘Double-play’ and ‘Triple-play’ means wo or three services – phone, broadband and TV - offered in a bundle. Cracks appeared in Talktalk by the end of the year, however, and in October the company had to admit its start-up losses were growing as demand outstripped its ability to service accounts.

In April the company confessed to the Guardian newspaper that the problems hadn’t gone away. None of this has stopped other companies joining in; Orange became one of the first mobile providers to offer a similar service, although even at that early stage users started mumbling about changes to their contrac ts.

Orange would only offer its internet service to customers on fixed mobile phone contracts rather than Pay As You Go, (although to be fair, why would they offer a free service to someone who wasn’t going to commit to use their other services?) and it wasn’t worth doing unless you were already paying more than £30 per month on this contract.

It is now possible to get your home phone, mobile phone, internet and additional TV channels from a single supplier. The companies involved originally seemed to be on to something.

Continental Research published a report in Autumn 2006 indicating that only 15 per cent of people didn’t want such a combined service, a third didn’t much care either way, 31 per cent agreed slightly with the suggestion that they should receive everything from the one supplier and a fifth felt strongly that they did want a single source for all of their communications. Ofcom, the communications regulator, believes that about 40 per cent of potential customers have already switched to one of these contracts.

But over the past year, disillusion has started to set in. In part this is because people had misunderstood the nature of these offers. Like all commercial arrangements, they were put in place to lock customers into a service and make some money for the company involved, both goals that might not be in the customer’s favour.

This is why the customer needs to be equally businesslike and ask some tough questions about whether they need a particular service, or whether the offer will actually save them money. It’s certainly worth getting rid of the notion that any of the elements of the package are ‘free’ at all; they’re all paid for, although some may be subsidising the others. It’s crucial to look into whether a customer can end up paying for more than they need or use.