November 10, 2004

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ADSL and broadband Internet access plans that bundle high-speed 'Net services with cable TV and certain telephone features are getting more popular, but people need to do some due diligence in making sure a discount on one service effectively translates into real overall savings in the long run.

SBC Communications last week sliced its basic DSL package to $19.95 a month--about half the price of most comparable cable broadband offers, and even slightly less than some slower dial-up services, such as America Online.

Be careful. Even though that deal leads with one of the lowest DSL prices in the land, the total comes in at more than $70 a month and could wind up costing you more than you otherwise might pay for broadband and phone service. That's because subscribers must also purchase SBC's complete local and long distance phone plan, which costs $48.95 for unlimited local and long distance calling, voicemail, call waiting and other perks.

If your phone bill averages significantly less than that--for example, through a flat rate $24.95 broadband phone service like Vonage--the deal quickly loses its luster.

"You're not getting a big discount until you start piling all the (services) in," said Mark Cooper, director of research for the Consumer Federation of America.

Telephone and cable companies are bundling broadband with voice, video and wireless services to lure customers.

Both industries are spending billions to outmatch one another with bigger service bundles. Want a discount? Buy more--a lot more.

More on DSL and ADSL
In a telecommunications-heavy world, pricing trends highlight a new fact of life, consumer watchdogs warn: To save some money, you may have to spend a great deal more.

Families can now easily shell out more than $100 a month for local and long distance phone plans, subscription TV, pay-per-view, Internet and cellular phone service. New demands in the form of Internet media--music downloads, interactive games, satellite radio and video-on-demand services--promise to push costs, and bundling opportunities, to even greater heights.

The packaging of TV, telephone and broadband services in a single bill highlights growing competition between the Baby Bell phone companies and cable conglomerates.

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Bundling makes sense for both sides because customers who buy more services are more likely to stick with them in the long haul. And by offering other services such as local and long distance phone calling, cellular plans and cable or satellite TV, consumers can pick the services they need at varying discounts.

But with all of these pricing plans and packages, are consumers getting real savings off their monthly phone or cable bill? It often depends on how much people buy.

Indeed, savings increase with more services, but so does the monthly bill.

Take Verizon Communications. The nation's largest phone company currently offers DSL with a download speed of up to 1.5mbps for as low as $29.95 a month for a one-year commitment and an extra voice line. People who buy a $54.95 unlimited local and long distance voice plan get up to 3mbps DSL for the same price and a discount on satellite service from DirecTV for about $37.

Verizon said it will soon introduce "naked DSL," which lets people buy only broadband without forcing them to buy a voice line.

SBC, the nation's second-largest phone company, has aggressively priced its 1.5mbps DSL as low as $26.95, with a basic local phone line costing $10.69 a month. The company is pushing to sell bigger packages, called "Total Connections," that include local and long distance voice calls, a Cingular Wireless plan and DSL, for between $78 and $90 depending on the state of residence. Add satellite TV from the Dish Network, and the bill costs between $108 and $120.

"It's important for us to move quickly so we can bring DSL to market to leapfrog cable and to do so at a reasonable cost," said SBC spokesman Wes Warnock.

Basic, barebones cable TV costs around $15 for Comcast, and up to $40 for more channels such as CNN and Lifetime with Cox. Digital cable, which offers more channels and, in some networks, video-on-demand, runs up to $60 a month in some systems, and even higher when adding premium channels such as HBO, Cinemax and Starz.

Remarkably, few cable systems are budging on their broadband Internet rates despite price competition from DSL. Most cable systems offer up to 3mbps download speeds for $40 to $45 a month, and about $55 for broadband without video. That amounts to more than $60 a month for barebones cable and broadband and more than $100 for digital.

Source: C-Net News