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Bundling Up

Speed and price were top reasons for choosing an ISP. Source: PC World Survey
Consumers are definitely interested in bundles," says JupiterResearch's Williams. "People are always looking to save a few dollars."

Phone and cable companies love bundles even more than their customers do: If you subscribe to a bundle, changing providers for a specific service later, such as switching from DSL to cable, is more difficult. And you usually must pay a penalty for backing out of a bundle before the contract--often a minimum of 12 months--is up.

Comcast's Triple Play, a typical bundle, delivers cable or satellite TV, local and long-distance telephone, and broadband Internet for about $100 a month for the first year of service. Caveats abound, however. (See "Buying a Bundle: What to Ask Before You Order" for a closer look.)

A bundle can be as simple as a TV/Internet combo, or it can be a multiservice package with Internet, TV, and home and mobile phone service. The benefits to you: one bill (not that paying two or more bills is a great hardship), and possibly a slight discount over à la carte service prices.

Given that service providers pitch their bundles relentlessly--go on, check today's mail--it's no surprise that two-thirds of our survey respondents have one. Of those who subscribe to bundles, about half told us they do so because the services cost less; a little less than a third cited the convenience of dealing with a single bill.

Bundles aren't for everyone, though. "I'm afraid if I dump all my eggs in one basket, I may find myself eventually paying more for these services," says Arthur Robinson, 55, a software instructor in Locust Grove, Georgia. Instead, Robinson gets DSL from EarthLink, phone service from AT&T, and satellite TV from Dish Network. He pays $130 a month for all three--comparable to what survey respondents said they pay for their bundles. "I like having people compete for my business--the phone, cable, and satellite companies," Robinson says.

Sometimes a service bundle is the only game in town. Take DSL, for instance. At first glance DSL appears to cost less than cable Internet does. AT&T--the nation's largest Internet service provider, with 12.9 million broadband subscribers--offers 768-kbps DSL for $15 a month. But to receive DSL in many areas, you must also sign up for landline phone service--even if you don't want it. Voila! An instant bundle and a higher monthly bill. Not only does this forced double-play pad the ISP's bottom line, it also discourages customers from using third-party Internet phone (VoIP) services such as Vonage, which typically charge less for local and long-distance service than the landline giants do.

The landline/DSL marriage may be on the rocks, though. In order to win Federal Communications Commission approval of its merger with BellSouth in early 2007, AT&T agreed to offer stand-alone DSL--no landline service necessary--to its existing customers for $20 a month by the end of this year. The deal is even sweeter for new customers, who can pick up DSL for $10 a month. The drawbacks: Internet bandwidth is capped at a relatively slow 768 kbps, and the cut-rate price expires after 30 months.

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