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Why Bundling Services Might be a Bad Deal

By Kevin M

Companies are always trying to get us to take their bundle plans, neat packages that promise a veritable one-stop shopping trip for all of our communication needs. Cable TV, internet, land lines, cell phones—they’ll load them all into a pretty little bundle for us and provide a nice discount for dealing in bulk.

It’s easy to see why we’re drawn to these arrangements. Not only do we get the lower rate for the package deal, but we can also consolidate several monthly bills into one and, we might reason, with so much of our business placed with one provider, we’ll have clout! After all, surely a provider won’t want to lose ALL of our business if we’re unsatisfied with any single service.

As attractive as that might sound—especially from a life’s simplification standpoint—my experience with bundles hasn’t been terribly positive. As good as the bundle plans might look from time to time, I’ll keep my communication services spread over three or four different providers.

Here’s why…

Not all providers are good at all services

I learned the hard way that a company that’s good at one thing may not be good at others. We took a too-good-to-be-true package from one company we were successfully dealing with. We already had their landline phone service which, though pricey, was excellent. When they came around bearing gifts with an internet and cable TV package we jumped. The option to add our phones into the package at a substantial discount was open, but given my normal hesitation in this area, we decided to wait before combining.

Thought the internet service was nothing special, the cable was outstanding—except for one thing: most of the time it didn’t work.

Five teams of technicians came to the house over a space of several weeks, but none were able to identify the problem, let alone fix it. We were down more than we were up, and the internet usually went with it. After a two month experiment, we terminated the deal. Sadly, we had the same company for our cell phones a year earlier and they were equally inept at that. The only thing they were good at was landline phones, but they weren’t inexpensive either.

Needless to say we severed all ties with that company, including the excellent but pricey phone service. Wiser for having been burned, we returned to our policy of spreading our services over several providers.

That company needed to do what they did best—landline telephones—and find a way to do it for less, rather than branching into providing services that are beyond their abilities.

Lack of flexibility

When we’re shopping for deals and price is the primary criteria, we can be leaving a lot on the table in other areas. What ever company you decide to deal with you’ll be limited to the features and product selection they offer on any service. They may have the best cable TV package on the market, but if their cell phone and internet services are something less, you’ll have to take them anyway or lose the pricing benefit of the bundle.

Customer service and billing can be another flash point. If billing is a problem with one service and you have four services with them, you’ll have four billing problems. Or one billing problem spread over four services. It’s not a mix and match, you’re taking what ever they have with all the attendant problems that go with them.

A lot of people prefer a four-in-one bill with all services on a single bill. While you might save money with this, you can end up with one massive monthly bill the size of a modest car payment. If you’re not particularly good managing your budget, this can become a problem.

It restricts the search for better deals

The communications industry is in a constant state of flux. Deals and packages come and go and the only way to be able to take best advantage of them is to be ready to make a move when they come up. Bundles complicate this.

When you’re in a bundle, the price you’re given is usually dependent on having all of the component services in the original plan. If you withdraw one service to pursue a better deal with another provider it will probably mean that the rate on the remaining services will go up, reducing or even eliminating the advantage that might be gained by switching one service. This is one way that providers keep us from straying from their bundles.

One of the factors that might push you to look for better deals is of course that once you’re in a bundle the price will go up. Sometimes it will go up in unannounced small increments that you may not notice unless you compare this month’s bill to one from a year ago.

Sometimes it will go up in a single, announced increase. And sometimes you’ll experience both the gradual monthly increase along with a sudden spike.

Often, we pay the increase because replacing all of these services can be a real hassle. You spend hours on websites studying the matrix of service and program combinations of competing provider bundles, and once you select one, hours more on the phone working out a series of small but critical details. Then the service people need to come out and you need to be home when they do. After everything’s up and running, it’s nail biting time to determine if

  • the combination of services is right for you
  • if the service performs as promised
  • finally, when the bill comes if the pricing is exactly as promised; this is complicated by the fact that you often have to wait two billing cycles to know for sure, since the initial bill usually contains a host of adjustments of one sort or another.

Moral of the story: moving entire bundles isn’t easy—which is reason number two why you probably won’t move it. And the providers know this too.
 

The good news on bundles is mostly up front when you first enter them. But the price advantage tends to decline in over time as other services become available for less and the cost of your bundle increases.

What are your experiences with bundles? Did they save you money? Were/are you satisfied with ALL of the services in the package? Do you have any bundle horror stories?

(Photo courtesy of djwudi )


6 Responses to Why Bundling Services Might be a Bad Deal

  1. My biggest bundle is with Comcast for internet, phone and tv. I am so darn entrenched with my email that switching would be a major hassle, and the price keeps climbing. I feel trapped. But I suppose that would happen with any internet provider. The bundle deal seemed so good at first though, but now I am second guessing. Service is not the best either, but again, I have not heard good things about many cable companies.

  2. We have Comcast for cable and internet and we’ve had a really good experience with them. We had them before our two month switch, then returned after. They held our service at a very minimal fee during this time, then reconnected us without charge–the interim company not only disconnected their cables, but actually cut the wires!

    Comcast has marketed us for telephone service but we aren’t jumping. Two services in one mini-bundle is enough.

  3. I dont have a bundle, too expensive for my budget. My brother has cell phone, house phone, fios internet, tv… all on one bill. he pays like $245/month. That is a lot of money in my book.

    I have no cable tv, My cell phone costs me $26 every 3 months, my internet is locked in at $14.99/month. House phone is about $45/month.

    I think consumers are gullible. Bundling saves little money if any.

  4. FB – It sounds like you’re way ahead doing it piecemeal! That’s how we’re keeping it too. Because we didn’t take a full scale bundle, we were able to switch our two landlines over to Vonage for a substantial savings.

    I think that if you keep your services separate and keep your eyes open for deals as they arise, you’ll be better off in the long run.

  5. Great points, Kevin! It kills me when people buy things like life insurance from their property and casualty guy (who may or may not know anything about life insurance) because “we bundled it with our homeowners/auto policies and saved a few bucks!” I think that people will buy things because it’s a “Deal” rather than thinking their purchases through as to whether or not they need it. For instance, my cable company kept calling to say that for $10 more per month, I could bundle in my home phone. Well, I don’t need a home phone-regardless of what it costs.
    Think it through, people!

  6. Jon – I didn’t think about insurance bundles, but that’s a good one too. Most of them hawk bundles as a way of getting as much of our insurance business as possible. And you’re right, since most of us have so little understanding of insurance, we take the package and mostly assume we got a good deal.

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