SureWest announced their quarterly earnings today and revealed interesting insight into the future of the telecom business. Of the 3,900 traditional access lines they lost in 2Q08, 1,400 of them chose to stay with SureWest and selected a VoIP product. They converted 36% of their access line losses into VoIP customers – customers who may have been lost if not for their VoIP product. Additionally, SureWest reports that VoIP is a “…potentially higher-margin product when compared with SureWest’s traditional land line service due to its bundling requirements for SureWest data and long-distance…” As usual, SureWest is demonstrating leadership in the telecom space. By introducing a VoIP product or “Digital Phone” as they call it, they are creating a reason for customers to stay with them, not leave them. By bundling digital voice with their broadband product, they are meeting their cable and VoIP providers head on, with similar features, including unlimited LD and other feature rich packages. AT&T is following a similar strategy with their U-Verse voice product.
I recognize all telcos don’t have the flexibility of a SureWest, due to regulatory and settlement obligations. In some regards, many telcos have one hand tied behind their back when it comes to offering flexible IP based packages in their incumbent territories. But as the initial SureWest numbers suggest, providing IP based services can create flexibility and options. Options that allow telcos to adjust to the marketplace and possibly help stem the tide of growing traditional access line loss.