billso.com

One strategy that telecommunications companies have adopted is bundling, or selling a combination of services at a reduced price. The goal is customer lock-in, a situation in which the buyer is more or less trapped in their purchase. In many cases, lock-in happens when the customer satisfices or compromises to gain value or convenience. Customers might grow dissatisfied over time, but they are unlikely to leave because alternative services are not available, or their perceived switching costs are too high.

A variety of US cable television and telecommunication companies have offered bundling programs. The usual items include television service and broadband Internet.

Companies that offer cable modems usually offer these services through the same “pipe” or connection – the coaxial cable drop found in many homes.

Local exchange carriers (LECs) offer POTS (traditional or “plain old telephone service”), and the final connection to the home is the familiar RJ-11 modular phone jack found in most US homes. Some LECs also offer mobile phone plans in their bundles.

Landline connections may be offered through VoIP or POTS, depending upon the carrier’s technology.

Agonizing over savings

Alina Tugend of the New York Times provided a great example of this decision-making process in her article last week. Customers sometimes obsess over lock-in when their friends brag about how much they saved by switching. Yes, lock-in also works well for insurance companies, too!

In Honolulu, Oceanic Time Warner, Clearwire and Hawaiian Telcom each offer bundles. Oceanic has a standard cable television package that includes cable modem service, long distance calling and VoIP calling plans. Oceanic staff can connect the customer’s RJ-11 telephone jacks to the company’s network, so customers can continue to use their existing landline handsets and equipment.

Clearwire offers broadband Internet service, long distance calling and VoIP telephone numbers through its WiMax network. Customers can hook their landline phone into Clearwire’s modem. The Clearwire service does not require an installation visit, but the coverage areas are somewhat limited. This article at DailyWireless.org has several interesting diagrams of business telephone systems.

Hawaiian Telcom keeps struggling

The HawTel package includes a POTS landline, long distance calling and DSL. HawTel is still working on its IPTV offering, which has been delayed by implementation problems. IPTV would let HawTel offer television service through the same RJ-11 telephone drop used by its landline and DSL offerings.

As a side note, I hated HawTel’s obnoxious “Savers Unite” advertising campaign, and am glad that it has been replaced. Was the tagline a call to action or an insult? It was hard for me to tell. The radio and television ads reinforced a stereotype of the “thrifty local” who clips coupons, hoards travel-size toiletries and wears old clothes to pay the “price of paradise”. Then again, telecom marketing campaigns usually strive for the “common touch”, in an effort to hold the average customer.

Telecom bundles are subject to a host of Federal, state and local regulations. Pricing is often controlled by government agencies and franchise agreements. On 18 August 2007, I discussed HawTel’s naked DSL option, which let consumers order DSL service without a voice landline. HawTel was late to act, as thousands of subscribers adopted mobile phones and dropped their landlines. These customers switched to Oceanic, Clearwire, or other broadband Internet services.

Customer lock-in is difficult to achieve when companies fail to implement their industries’ key success factors well. On 16 November 2006, I discussed HawTel’s billing problems after the company was purchased from Verizon. Mike Ruley never overcame these earlier issues and lost his post as HawTel’s CEO earlier this month, as I mentioned on 5 February 2008.

From BusinessWeek, here’s an article with 10 tips for delivering effective presentations. this felt like a timely article, as students are starting to deliver presentations in their courses around this time of year.

The author uses Steve Jobs and his product announcements as an example, but many of these tips will work well for any presentation.

My favorite points on the list are:

1) Set the theme. Let the audience know what they will learn from the talk.

4) Use meaningful numbers. Discuss ratios, percentages and results in ways that the audience can understand. Never assume that the audience will do the analysis themselves. I sometimes hear graduate students claim that a company is doing well because it is earning a profit. My follow-up questions focus on their evidence for that claim.

Don’t sweat the small stuff. Product announcements sometimes become awkward when the technology malfunctions. Avoid fancy transitions and tools that take extra preparation, support or time to use.

10) Rehearse, rehearse, rehearse. A presentation is a performance. Most of the audience members have delivered presentations themselves, but they won’t cut the presenter much slack. The best content and slides cannot save a boring or poorly delivered presentation.

From the New York Times, G. Paschal Zachary presents a brief discussion of the risks of innovation. if consumers are motivated, they may accept tecnological changes more readily. Professor Zachary uses the Toyota Prius and its unusual user interface as an example.

BoingBoing had another post on a similar theme. Joel Johnson is glad his father replaced his old Windows computer with a Mac. Johnson describes how he uses the Mac’s features to help his father by remote control.

From one of my students comes a link to this article about Asustek, also known as ASUS. Here’s a November 2007 article from Forbes with some more details.

The company’s US$299 Eee PC laptop runs Linux on an Intel processor, and ships with OpenOffice and Firefox preinstalled. The price is less expensive than a copy of Microsoft Windows Vista, and was enough to scare Microsoft into a special deal: Eee PC buyers could add Microsoft Windows for US$40.

While the XO project and other spinoffs try to bring their low-cost laptops to the US mass market, Asustek is moving aggressively.

Wired has published a brief history of the iPhone’s development, as mentioned in Engadget. As I mentioned to my IS 7010-T students last Thursday, it is well known that Apple CEO Steve Jobs is a difficult boss. This article provides a few examples of how he led Apple to develop the iPhone, a device that has spurred almost every mobile phone manufacturer and carrier to reevaluate their business models… even Microsoft.