Cox announced that 62% of their customers subscribe to at least two bundled services, and 30% subscribe to at least three services. Compare that with AT&T, who by our estimation, has about a 45% penetration for at least two bundled services. Verizon is a little more difficult to compare with because they really have two classes of residential subscribers – those with FiOS access and those without. Here are Cox’s reported subscriber counts with corresponding year over year growth rates:

• 5.96 million total residential customer relationships; 1.6% growth
• 3.7 million bundled customers; 9.0% growth
• 2.38 million telephone subscribers; 17.7% growth
• 3.7 million high-speed Internet subscribers; 11.3% growth
• 3.1 million digital cable subscribers; 10.8% growth
• 557,000 “non-video” residential customers; 24.5% growth

Cox has always been seen as a leader in the MSO industry for bundling. They were bundling voice service using traditional circuit switched service (as opposed to today’s cable VoIP service) long before other cable companies got in on the act. Part of the reason they can brag about these impressive bundling penetration figures is because they have been at it longer than probably any other national MSO or telecom carrier. Cox is projecting over 4 million bundled customers in 2008.

AT&T is quietly meeting its BellSouth acquisition merger condition by expanding the availability of stand alone DSL. Its website now offers a stand alone 768K DSL product for $19.95. The “DSL Lite” plan differs from a similar AT&T stand alone DSL product offering of $10/month, in that there is no 12 month term commitment and it is more widely available. According to the Atlanta Journal Constitution, AT&T’s stand alone DSL product offerings have caught the attention of Comcast, who will soon offer a 768K cable modem service for $24.95.

These new plans will be interesting to observe for many reasons. One of the more compelling possible outcomes is unbundling. There has been so much discussion about and focus on bundling over the past few years (and rightfully so), but I’m starting to see more emphasis on unbundling of services, and stand alone broadband is a good example of this trend. Comcast just launched a new marketing campaign in the Washington D.C. market which highlights stand alone phone service for customers who don’t subscribe to cable TV. AT&T and other telecoms have been slow to promote these unbundled broadband services. But you wonder if that mindset will begin to change, as a potential market for unbundled services may soon blossom.

Recent news does not bode well for the wireless joint venture between Sprint and several cable MSOs, branded as Pivot Wireless. Sprint announced during their quarterly analyst call that they are freezing the rollout of Pivot to any further markets due to “provisioning complexities.” In other words, they can’t get it to work, at least not without too much trouble. Both Sprint and its cable partners have publicly said they are disappointed with Pivot’s performance so far. Is this recent news a precursor to scrapping the joint venture?

Interim Sprint CEO Paul Saleh announced on their earnings call, “As our focus is on simplifying the business and particularly focusing on the customer experience, we have made a decision not to expand that service in other markets or other stores.” Pivot is currently offered in 33 markets, with Comcast, Cox, Time Warner, and Advance/Newhouse as its cable MSO partners. The news may be more troubling for the cable MSO partners than for Sprint (although Sprint has no shortage of troubles right now). Wireless is increasingly becoming an important addition to the triple play bundle. As telecom carriers continue their ramp up of triple play solutions, they are exploring ways to leverage their wireless lead. Both Verizon and AT&T are marketing bundles that tie wireless, wireline, and video together. Many analysts suspect that mobile wireless will be the wild card in the competitive battle between cable and telecom. The Pivot Wireless concept bridged the wireless gap for Cablecos, at least temporarily. It’s long been rumored that Pivot was not perceived by Cablecos as their long term wireless solution, but it did get them in the business much more quickly than if they built something from scratch. It appears that strategy may now be in jeopardy.

Windstream, the wireline telco spin off from Alltel, announced a partnership with TiVo for a bundled high speed Internet and DVR combination. Windstream plans to market the interactive bundle as differentiated video service, providing broadband, access to broadband video content, and traditional DVR service for linear television viewing. TiVo offers a broad mix of broadband video content, including TiVoCast and Amazon’s Unbox service. This announcement is the second one within a week featuring a broadband TV launch for a large U.S. telco.

These deployments could be viewed as “pushing the envelope” of traditional entertainment bundles. The line between traditional multichannel video subscriptions and broadband TV appears to be graying by the week. Is it conceivable that a subscriber could choose a broadband TV enabled TiVO, over a traditional pay TV subscription? Maybe, but probably not – at least not yet. It’s more conceivable (at least in the short term) that subscribers will view this new bundle as complimentary to their subscription TV service. But as Internet content continues to flourish and search capabilities mature, an all broadband TV option may gain traction. TiVo is working to position itself as a potential solution of choice for this possibility. And telcos continue to explore the options of video services beyond traditional video subscription models. We can’t draw any firm conclusions from these trials yet. But they are interesting developments to study. We may be witnessing the early transformation of long standing video business models. Stay tuned.

In an effort to lock up residential and small business voice bundles, AT&T revised its AT&T Unity calling plan to include 'rollover' minutes and unlimited free calling within their landline and wireless customer base. Customers are now able to call up to ‘100 million’ phone numbers, both wireline and wireless, and not have those calls count against their wireless minutes of use. The changes now also include the rollover of unused minutes from month to month over a 12 month period.

AT&T continues to leverage its scale with its growing bundling strategies. To qualify for this plan, prospective customers must subscribe to both wireline and wireless service from AT&T and choose to have them on a single bill. Yet another example of how larger telecom carriers are leveraging their wireline and wireless network assets to offer bundling strategies that their cable MSO competitors are challenged to meet. Pivot wireless is the cable industry’s answer to the wireless issue, but its been slow to get off the ground. AT&T is trying to seize the advantage, while they still have it.

The latest J.D. Power and Associates 2007 Residential Regional Telephone Customer Satisfaction study, which was released today, does not bode well for telecom carriers. For the first time in history, cable companies lead customer satisfaction rankings for telephone service in all six U.S. regions. Cox is the clear winner, ranking highest in phone service customer satisfaction in the Northeast, Southwest, and West regions. A newcomer to the rankings, WideOpenWest ranked highest in the North Central region.

The study reveals that cable is performing better with bundles as well. Eighty-six percent of cable-based voice subscribers also subscribe to data services from the same provider, while the same holds true for only 36% of telecom based voice subscribers. The study reveals the growing importance of bundling, with "…36% of those who currently bundle reporting they would add even more products or services from their current provider, making the next several years crucial for both telephone and cable companies," said Steve Kirkeby, executive director of telecommunications and technology research at J.D. Power and Associates.

The study confirms the widely known trend that cable is performing quite well with their bundling strategies. The real news here is the gains cable is making in phone customer satisfaction. Past studies reveal decent inroads by cable on telephony satisfaction, but this most recent study suggests that cable is now leading the pack. Quite an impressive feat in such a short amount of time, especially for an industry with significant poor customer service 'baggage.' While it’s too early to declare long term winners, cable clearly has the momentum. The telecom industry will have to get creative, and soon. I suspect that including wireless with bundles will help close the bundling gap, but telecom players have some work to do to regain customer satisfaction rankings for their core service.

Read this J.D. Power press release for more details on the study.

AT&T launched a free roaming program to nearly 10,000 Wi-Fi hotspots for qualifying broadband subscribers. According to AT&T, the hot spot network includes “…leading airports, McDonalds restaurants, Barnes & Noble bookstores, coffee shops and popular sporting venues.” Of course, the venerable Starbucks and its thousands of accompanying hot spot locations are not included. Starbucks is the domain of T-Mobile, who also recently launched their own hot spot initiative. In order to qualify for the free hot spot service, consumers and businesses must subscribe to certain AT&T broadband products.

Timing this announcement closely with the recently launched and fanaticized Wi-Fi capable iPhone is no mistake. In addition, AT&T announced that these same qualifying broadband subscribers can receive a free wireless Wi-Fi router for their home. Both maneuvers hope to encourage bundling of broadband and wireless service by existing and potential AT&T customers. And while you’re at it, why not take U-verse video and home phone service to boot. It is a shrewd bundling tactic. One that is somewhat difficult for cable MSOs to match. Not as difficult for Verizon Wireless and Sprint, but nevertheless, a nuisance that will need to be addressed.