The Telecom Wallet or “How I learned to live with the Bomb”

A funny thing happened in the communication industry about 10 years ago. A bunch of fancy guys decided that what the country needs is for all telecommunication services to come from each of them: as a single supplier to the consumer. Why fight for a bigger piece of pie when you can fight for the whole pie? In my last blog posting, I spoke about the Quadruple Play, in which Cable Companies and Telco’s, each want to provide all of a households communications services. However, it took mergers, takeovers, buyouts, changes in the Telecom Acts, changes in administrations and many years for policy to allow these companies into a greater diversity of communication businesses. Then the ability to combine those offerings efficiently took billing and customer care advances. But we are there now.

A long time ago, a great friend and mentor of mine, Brad Hughes, introduced me to the concept of the Telecom Wallet. He explained that phone companies were very interested in how much a family spends on all communications within a household each month. The sum of their telecom services was the Telecom Wallet. Since I worked at Telephia (now Nielsen Mobile), this was a great concept to dive into with our survey tools.

One of my epiphanies (while sober) was that when I graduated from undergrad and got my first place, my telecom bill was $30/mo. This covered a residential line and half a dozen LD calls. When I got a steady check, I got basic cable for another $20/mo. My Telecom Wallet was now $50 in 1985. Currently, for my family of 4: its $400/mo. (In 23 years it has increased TWENTY-FOLD!) Believe it or not, I try to be frugal (no Satellite radio, no Onstar, only 1 premium cable channel, no GPS subscription, and TiVo was paid for years ago). My Telecom Wallet could easily grow by another $200/mo. if I took my foot off the brakes this holiday season.

While this is my industry and passion, there is ticking bomb. It lies in the essence of the Quadruple Play strategy. I believe most people in America don’t know what their total Telecom Wallet (monthly cost) is. They never lump all the elements into one pool and really look at it. If they did, they would freak out. An offering of a Quadruple Play forces a focus on the total Telecom costs which do add up fast. This almost always forces the consumer to see the “$300 or $400 light” and do one of the following: 1) Reassess their expenses for Telecom and make cuts, 2) Shop for the best bundle once there is an awareness of bundled offers, 3) Do nothing at all (which is what most people are doing), or 4) Sign on because it will simplify thier life (the path least chosen).

In the end, writing one big check to your Cable or Telephone Company for $400/mo. will negatively alter consumers’ buying behavior away from communication services in the short term. I suggest that the Quadruple play go back in the closet for now. One day soon, all the elements of the Quad Play will flow through a fat wireless pipe; each seperate service morphing into mere applications. At that time, we will pay the meter for what flows through our pipe regardless of the device or location.

Author: Gary Cohen