Verizon is considering a $5 phone line option for its broadband customers — that’s a very smart idea and here’s why. The most important thing a telecom service provider can do right now is maintain its relationship to the broadest base of its customers. At one time, the home phone line was the primary tie between a telecom company and its consumers, but we all know this is no longer the case. Increasingly, the broadband connection is the primary tie, in addition to, for some consumers, a video offering sold either directly by a telco or through a partnership with the satellite company.
Telecom service providers who remain inflexible in their voice service pricing are practically inviting consumers to cut the cord — especially in hard times — and to explore cable options, which often include a cheaper VoIP-based voice option. Once that consumer has moved to a cable bundle, it is much more expensive to try to win them back.
By offering flexible and very reasonable pricing for a landline service, any telecom service provider gives consumers a solid option to maintain a landline, for safety and security reasons if nothing else. A landline phone will operate when commercial power goes out and is a secure way to contact 911 in an emergency and know for certain your location will be known to the operator. Cable VoIP service has a battery backup and, as many Houstonians learned during Hurricane Ike last summer, batteries will run out during prolonged power outages. At $5 a month, the landline is an insurance policy. And since many consumers use their wireless phones, with free long-distance, to place any call that isn’t local, a cheap voice service could truly be a cheap voice service.
Telecom service providers have shown their flexibility in the past, most recently by bundling wireless service and broadband, giving cord-cutters a reason to stay with their telco, and not jump completely to cable. As times get tough, it is important to remain open, and to creatively explore consumer-friendly options, and that is what Verizon is doing here.
One additional note, however. Depending on how that $5 phone service is offered, marketing it as a security blanket when commercial power fails won’t work if this lifeline service is based on a fiber-to-the-home network and consumers are well-prepared with battery backups. This remains an issue the telecom industry needs to address.
I work for Verizon and I’m not affiliated with the team that will be marketing this $5 phone service, but I can tell you that this service will be targeting DSL customers which of course is a copper-based platform. I agree, $5 phone service is a very good idea. It offers customer flexibility and provides a very low-cost alternative to VOIP carriers such as Vonage. Any outgoing calls could be made using pre-paid phone cards. I still know peope who using these pre-paid cards exclusively for their long distance service. During a power outage and depending on how your HSI/POTS service is delivered, you may not lose service. However, a lot of HSI/POTS service these days is delivered via SLC systems which need external power in order to operate. If you are fortunate enough to have POTS service that is straight copper from the serving office, you won’t have to worry about losing service in the event of a commercial power loss.
It will be interesting to see the reaction to this offer by customers in the late majority and laggard categories. Maybe this is the right incentive to move them to subscribe to DSL or a VoIP product. If not, seems like customer service reps will spend the better part of their day explaining to POTS subscribers that they can’t have the $5 promo. I am skeptical toward the idea that forfeiting POTS margins in this economy can bring positive results. But I want them to try it anyway. -The competition.
I’m a member of the generation that is increasingly abandoning wireline phone service (I’ve paid for a grand total of 2 months of landline phone service as an adult, five years ago. The only people who called were solicitors.) However, at only $5 a line, and bundled with internet, I could see jumping for the luxury of an emergency-only landline.
And I’m a sceptic.
This is a plan they should pursue.
insurance considerations aside, your position needs to be put in front of the FCC, because the high interstate subscriber line charge ($6.50 in my case) will be placed on the line regardless of lower price. appears someone needs start lobbying to phase out the cross-subsidies that add these govt and large industry lobbied charges and taxes to local telephone wireline service. this cash cow for the govt and industry no longer serves its intended purpose.
T-Mobile already offers a $10 home phone service called @Home (www.tmobileathome.com) nationwide and the rumor is that it is a huge hit. It’s a perfect compliment to their mobile service and the $10 is tacked on to the mobile bill just like a second mobile line, except this comes with a VoIP terminal adaptor.
It’s just one more way for T-Mobile to drive fixed-to-mobile substitution.
Maybe Verizon is reacting to @Home.
I agree that the $5 phone line is a great idea except that after all the fees and taxes it will probably be $15 per month making it not such a great idea. Direct TV and Dish both require a phone line connected to their equipment in order to track location and encourage PPV Movie transactions. If not connected, Dish charges $5/month on leased equipment. This would become a wash expense for those on Satellite (except for taxes and fees).