Alan Weinkrantz was happy enough with his Time Warner Cable service, but when given a chance to be part of AT&T's beta trial of IPTV, he couldn't pass it up.

“I wanted to see what it's like, and I thought about blogging about it,” said Weinkrantz, whose personal experience with IPTV appears at http://alanweinkrantz.typepad.com/.

When the San Antonio resident — a publicist for high-tech firms such as pulver.com — called Time Warner to cut the cable cord, he told the customer service rep (CSR) that he planned to switch to AT&T's IPTV service.

“She was confused,” Weinkrantz recalled. “She had never heard of it. I asked her if they would do anything to try to keep me, and she consulted her supervisor.”

The upshot was a deal to cut $40 off Weinkrantz's cable bill, a savings of almost one-third the total.

It wasn't enough to keep the curious Weinkrantz from switching to IPTV, but that on-the-spot response is becoming more typical as competition heats up between cable companies selling voice service and telcos getting into the video business.

As a result of competition, in fact, what you pay for a bundle of voice, data and video services often depends on where you live, whether you've left one service provider for another, the current discount being offered and even how aggressive you are in dealing with the CSR on the other end of the phone.

Competition can produce extraordinary deals. Verizon's 30 Mb/s Internet service over its FiOS network is $54.95 in New York and Virginia or more than $100 cheaper than what it costs elsewhere. Comcast is offering a voice, video and data service bundle for $69 in its Northeast region to customers who bolted for RCN, satellite TV or Verizon and are now willing to come back. In Chicago, a similar package costs about $125. Other companies are offering special discounts on one or more services, but plan on luring customers into buying an entire bundle during the process, which not only drives up the average revenue per user of a service provider but also increases retention rates and disconnects the competition.

“Once you sell the bundle, you get sticky, involved products that require customers to go to greater lengths to disconnect, like wireless and DSL,” said Don Livingston, senior director of marketing for BellSouth. “They don't tend to leave — either they value you or they want to avoid the hassle or both. That's dandy; I'll take both.”

The primary strategy of the flurry of promotions — including BellSouth's recent offer to pay customers up to $200 in rebates for signing up for voice, data, video and wireless service — is to get customers to call. Then it's up to a CSR to upsell like crazy.

“You want to make a strong enough offer to make the phone ring,” said Randy O'Neal, director of bundling and video product management for Cox Communications. “As long as we can market something to make the phone ring, we have been able to have success at selling all three products.”

“Typically, what happens is a person calls in on a DSL promotion, and our CSR tells them about a special DISH [satellite] offer,” said Tyler Wallis, assistant vice president of voice, wireless and bundles for AT&T.

As a result, he added, a big part of the competition effort goes into training CSRs to be able to both field calls and handle a much wider array of products, services and discounts than ever before — and to be able to know when and how to upsell.

“That is a very big part of it and something we are really focused on — making sure our reps are well-equipped and well-trained,” Wallis said. “They have the job of helping our customers save money.”

In some instances, the immediate competitive response is localized. According to a Time Warner Cable corporate spokesman, the company isn't routinely offering customers a $40 per month discount to keep them from trying IPTV, although it is running a special introductory package promotion in San Antonio that features digital video, including Showtime and The Movie Channel, high-speed Internet access and digital phone for $89.95 per month.

“It has no tie-in with AT&T's IPTV service,” the spokesman said.

All of the marketers acknowledge the need to strike a balance between making services attractive to customers, in terms of price, and making sure the introductory discounts and other special offers don't backfire in terms of customer response.

Cox is constantly doing market research to determine what customers want, O'Neal said, and is beginning to see some negative reaction to promotional discounts.

“We are beginning to see a little bit of consumer dissatisfaction,” he said. “Customers call up, expecting to get this price, and either they have to buy a whole lot of telephone services or it's not the discount they expected.”

There also is some danger of backlash from customers who don't qualify for the discounts, said analyst Teresa Mastrangelo of broadbandtrends.com.

“It's frustrating to the person in Texas who is paying $179 for 30 Meg knowing that in another market, it is one-third of the cost,” she said.

Municipal officials are worried discount pricing that targets competitive areas will be unfair to those who don't have a choice of bundled service providers.

“The neighborhoods that have competition get lower prices and more choice,” said Ken Fellman, mayor of Arvada, Colo., who represented the U.S. Conference of Mayors in congressional testimony on national video franchise law. “There is nothing that would preclude an incumbent from lowering prices to compete where there's competition and raising them to subsidize their service where there isn't competition. That's a double whammy for some neighborhoods, which end up paying more for their monopoly service.”

Telephone companies, which have been the most aggressive in cutting prices — especially on DSL service — address customer dissatisfaction directly, they say.

For example, although discounts are usually available only to new customers, if an existing customer calls to complain, BellSouth will give them the new customer discount as a reward for their loyalty, BellSouth's Livingston said.

“We don't advertise that because it's bad for the bottom line, but if a customer calls in, it's better to give them the discount than to lose that customer,” he said.

Similarly, when a promotional discount period expires, customers who call AT&T can essentially extend the promotion period, AT&T's Wallis said.

“Our commitment, at the end of the one-year promotion, is to offer them the best price in the market,” he said. “If our price is $14.99 for a one-year commitment, and a year from now it is $13.99, if the customer calls up and demands that, they can get it. If they call back after a year, we'll give it to them again.”

All major service providers also know which customers have left them for a competitor and actively work to win them back. Both AT&T and BellSouth indicated they have been working to win back customers for years, first competing against CLECs and now more often against cable bundles.

“We do try to win every single customer back,” Livingston said. “We don't know, when that customer leaves, if they are with a cable company or with a CLEC. But we do different, deeper, richer offers in markets where the cable company losses are dominant. We do things more aggressively, and our success rate is continuing to climb. Every 44 seconds a customer comes back to BellSouth, not just against the CLECs but also against cable.”

“We have a very extensive win-back program,” Wallis said. “We win back hundreds of thousands of customers a month. It's not new to us. We tend to offer a little bit better discounts in our win-backs — it's our very most aggressive offer with everything from really good rates on long-distance and local service to bundling up with Cingular and DISH.”

Cox also conducts periodic win-back campaigns, but O'Neal prefers not to share details.

At this point, Weinkrantz is a happy AT&T IPTV customer, even though he had to give up the high-definition service and more robust digital video recorder capabilities he had with Time Warner Cable.

“AT&T was upfront about that going in, so I knew what I was getting,” he said. “I just wanted to see if I can come home, turn on the TV and enjoy myself and have fun. So far it has been quite good. Everyone who sees it says the same thing — there are two common themes: It's faster — the channels change really fast, and the interface is superior — it's much easier to navigate.”

Plus, he said, every TV in his house now has its own IP address, “essentially becoming a node on a home network, and that's pretty profound.”

And it doesn't hurt that he's paying $29 per month (during the beta trial) for his bundle of AT&T services.

THE HIGHS AND LOWS OF TRIPLE PLAY

AT&T*
California	AT&T Triple Pak	$78
Connecticut	AT&T Triple Pak	$97
BellSouth*
Tennessee	BellSouth Answers	$107.89
Kentucky	BellSouth Answers	$112.39
Comcast
Illinois	Digital voice, basic cable and cable modem	$124.92
Boston	Digital voice, basic cable and cable modem	$99
Cox
San Diego	Cox Original Combo	$99.99
Atlanta	Cox Digital Cable (four tiers), digital voice, high-speed Internet	$160.79
Verizon*
New York & New Jersey	Freedom Value, 3 Meg DSL and DirecTV	$98.99
California	Freedom Value, 3 Meg DSL and DirecTV	$108.99
*Rate fluctuation due to telephone rates