Sometimes who you know is more important than what you know. As a part-owner, BellSouth knows Cingular and that’s making it possible to run a market trial of integrated wireless and wireline communications. The trial is a commercial precursor of what some are dubbing the “fourplay” of wireless and wireline voice, high-speed data and video, and it’s evidence that a telco, with an established relationship with a wireless carrier, has an early leg up on cable operators. “The relationship with Cingular is certainly helping us,” said Mario Muth, senior product manager-wireless services, for BellSouth. Cable operators now have no such relationships in their arsenal. The cable industry is considering partnerships with non-affiliated cellular providers like Sprint and T-Mobile or even buying minutes and becoming mobile virtual network operators (MVNOs). “Voice-centric” trial For now the cable industry has no answer to what BellSouth can accomplish in this trial where, over the next 60 to 90 days advertising giant Grey Worldwide’s Atlanta office will help work out the bugs of a one number/one voice mail box technology offering. Selected Grey employees will get a Motorola cell phone that operates on the Cingular cellular network outside the office and the BellSouth-provided wireless local area network (WLAN) via Wi-Fi on the corporate campus. It’s not exactly the fourplay that cable is scrambling to figure out, but it is a viable test of the power of seamlessly connecting wireless and wireline services on IP-based networks. “It’s IP PBX and it’s definitely VoIP,” said Muth, who said the trial is “very voice-centric right now (but) we’re also testing data on the device … and playing with things like address book look-up.” Video’s not a part of the trial because business users don’t—or shouldn’t—care about video entertainment. The trial fires a warning shot over cable’s bow that the telcos are serious about collaborating with their wireless brethren to deliver seamless services. “We’re going to find out what’s the impact of minutes usage—how many minutes did they use before this trial, how many minutes are they using after the trial? We want to see how these minutes shift from the GSM network over to the Wi-Fi network,” Muth said. Cable—no threat? Cingular’s cooperation—which is something cable operators would not likely have—is the key ingredient. Cox Communications, which is headquartered in Atlanta, nor Comcast, which owns the Atlanta cable franchise and, ironically, sold its wireless business to Cingular, declined to comment on BellSouth’s activities. Muth, meanwhile, was more than happy to point out how the trial will help BellSouth solidify an area where cable is not yet a competitive threat—the commercial enterprise space. “Cable is an alternative in the small business market, but is really not the right alternative for large enterprise customers,” he said. Many new telecommunications and IP-based applications originate in the office and migrate to the home, so BellSouth’s consumer services group is keeping a close eye on this trial as it prepares a video entertainment offering. A seamless connection to wireless would give the telco a fourth bundled service that cable could not, at this time at least, match. On to consumer behavior BellSouth is already confident that the technology works and now wants to learn how consumers like it and how the business model will work between the wireline and wireless carrier. “We’ve tested it in our labs for quite some time and actually have internal employees in our research group who are on there. We want to see the impact and how this is perceived, how the culture is changing and how people are using this technology,” said Muth. “Certainly the technology we have works well together because we have Cingular.” If all goes well, he said, BellSouth will “move forward” with the technology and the concept—most likely in both the commercial and residential spaces. He expects things to go well. “The customer is very excited about this and is anxious to see how employees are reacting and using it,” he said. “Bottom line, when you have both wireless and wireline assets… that really is a big advantage.” According to a recent study, Cox Communications ranks highest amongst phone operators in a survey of customer satisfaction for both local and long distance telephone service. In J.D. Power and Associates’ 2005 Residential All-Distance Telephone Customer Satisfaction Survey, Cox was the only cable operator to rank first among the study’s six regions. Cox received the highest score in the West Region, which includes SBC, AT&T and Qwest, and had the highest score in all six of the regions. For the first time, J.D. Power and Associates measured customer satisfaction with both local and long distance telephone service in one study, reflecting the growing percentage of U.S. households bundling both services with a single provider. Overall satisfaction was measured based on performance in six factors: customer service; billing; performance and reliability; company image; offerings and promotions; and cost of service. In the West Region, Cox received top ratings in all six of the factors. “The cable industry has a great company to emulate in Cox,” said Steve Kirkeby, senior director of telecommunication research at J.D. Power. “Cox blew away the competition in its region, and had a better score than any other region. For them to do this well doesn’t surprise me at all, and for them to do well against phone companies doesn’t surprise me at all.” Comcast was the only other cable company with enough of a footprint to be included in the study by appearing in four of the six regions. “Comcast finished average or below average, but a lot of that has to do with what they inherited from AT&T Broadband,” Kirkeby said. “AT&T Broadband didn’t have many of the pieces, so Comcast had an uphill climb. Only recently has Comcast started focusing voice products as part of its triple play.” Fewer customers changing The study found that despite the cost savings associated with bundling local and long distance service with a single provider, cost of service and offerings and promotions are the factors that consumers rate lowest in satisfaction. Customers report spending an average of $50.70 a month for local and long distance service, compared to $64.40 in 2004. “Consumers continue to expect even more discounts from their carriers in exchange for their patronage and loyalty,” said Kirkeby. Today’s range of telecommunications options and increased competition for residential customers give consumers “a great opportunity to save money and still receive high levels of customer service,” he said. The number of households reporting that they changed local or long distance service providers in the past year plummeted — from 17 percent in 2004 to 10 percent in 2005 for local service and from 31 percent to 12 percent for long distance. Only 7 percent of respondents indicate a likelihood of switching carriers in the future — down from 17 percent for local service in 2004. “This drop in switching is evidence that large numbers of subscribers have already combined their local and long distance service and expect to stay with their provider for the time being,” said Kirkeby. “However, there is still strong interest among consumers in promotions that couple wireless service plans, which typically have a fixed number of minutes, with traditional telephone service, providing optimal savings.” It was the bundle, baby Kirkeby said Cox’s telephony success comes from its early deployment of its circuit switched telephony and from understanding the power of bundling services. “We see the lifts for bundles for three reasons: one is for simplicity, which means they can go to one place with their questions, another is having one bill and the third is better prices,” he said. “Consumers are more confident in their ability to buy the bundle because they know they can afford it. Cox knew that a long time ago and has done well building the business within the boundaries of its support system.” Study results by region are: Northeast Region : Verizon ranks highest, outperforming other carriers in billing, image, cost of service and offerings and promotions. Mid-Atlantic Region: AT&T ranks highest, with top ratings in all six factors. Southeast Region : AT&T ranks highest, performing particularly well in image and billing. North Central Region : TDS Telecom ranks highest, receiving top ratings in the performance and reliability and cost of service factors. Southwest Region: AT&T and SBC tie to rank highest in the region. AT&T receives the highest ratings in the region in image, cost of service and offerings and promotions, while SBC receives top ratings in the performance and reliability factor. West Region : Cox Communications ranks highest, receiving top ratings in all six factors. Cox is the only cable company receiving a top regional ranking in the study. The 2005 Residential All-Distance Telephone Customer Satisfaction Study was based on responses from 10,292 customers nationwide who receive their local and long distance service from one provider. –Jim Barthold

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