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TV, phone and broadband bundles
By Emma Lunn
So far, 2007 has been the year of the bundle. Virgin Media (VMED) (formerly ntl) launched its 'quad-play' offering in February, which lets consumers bundle together differing combinations of broadband, digital TV, home and mobile phone for a single price.
Meanwhile, Sky (BSY) launched 'See Speak Surf', which offers
customers broadband, home phone and digital TV for £26 a month.
A bundle is basically an offering of two or more products for one monthly charge. Initially, broadband and home phone were bundled together by firms such as AOL, BT, TalkTalk and Tiscali. But now there's a 'battle of the bundles' between providers that can offer a broadband, home phone and digital TV combination.
Homechoice (now Tiscali TV), Sky and BT (with its BT Vision product) have all started to do this, using ADSL lines on the BT network, while Virgin Media uses the cable network developed by ntl and Telewest for its bundled offering.
Recently, partnerships and acquisitions have allowed some companies to bundle mobile phones alongside broadband and home phone services. For example, mobile phone company Orange took over broadband provider Wanadoo and ntl bought Virgin Mobile, meaning both Orange and the newly formed Virgin Media can offer bundles that include a mobile phone element. Vodafone (VOD) also offers broadband to its existing client base.
Bundle offers
Virgin Media's headline offering is '3 for £30', where customers can pick three of the company's four products to include in a bundle. Sky's advertising concentrates mainly on its £26 'See Speak Surf' product, although it offers both cheaper and more costly alternatives. However, you have to pay a separate charge of £11 to BT for line rental, so the true cost of the £26 deal is actually £37.
Chris Frost, communications expert at price comparison site uSwitch, says: "Virgin Media's '3 for £30' deal is £7 cheaper than the equivalent Sky 'triple play' package, although Sky offers speeds of up to 8Mb (compared with Virgin's 2Mb), a wireless router and free national calls, not only at weekends but also in the evenings. However, the Virgin Media VIP package is £10.50 a month more expensive than the Sky equivalent. For people who currently subscribe to neither service, Sky offers savings of £52 over the first year, if you take set-up costs into account."
But, tempting as they might be, Virgin Media's new deals are only available if you live in a cable area - which means only about half of the UK population - although it plans to increase its coverage over the next year.
Jason Lloyd, head of broadband at Moneysupermarket, says the Virgin Media offering is "exciting and significant". He adds: "Perhaps the only drawback is that you have to pay Virgin Media a £25 installation fee for cable products. And, once you've made the change to a cable network, if you ever want to go back to BT, you'll have to fork out up to £120 to have a BT line installed."
Additional services
It's also not such a great deal for existing customers who have to take out an additional service to qualify for the bundled rates.
As well as the launch of Virgin Media and Sky's new bundle, there have been other changes in the telecoms and broadband market that should lead to even more choice. In December, BT launched BT Vision, a combination of a Freeview set-top box that delivers over 30 free-to-air channels and an inbuilt personal video recorder that can store up to 80 hours of TV and hundreds of music or picture files.
A BT Vision box costs £90 to install, but there's no monthly subscription, although you need to be a BT Total Broadband subscriber to get the service.
Tiscali offers customers a 'triple play' package that is cheaper than both Virgin Media and Sky. For £19.99, you can get 2Mb broadband, a 'TV pack', line rental and free weekend telephone calls. The Tiscali TV pack offers more than 30 digital TV channels, including all the Freeview channels and a 'replay or catch-up' service.
But as with Virgin Media, Tiscali TV is only currently available in some areas (London and Stevenage). The firm plans to roll out services across the UK and says they should be available to Tiscali's entire unbundled local loop network (the BT exchanges in which Tiscali has equipment) by the end of next year.
Good value?
Whether bundles offer good value for money is open to debate. Generally, a bundle will only be right for you if you use all the products it includes, but it will also depend on how often you use those services (see box, above).
If you look at Virgin Media's '3 for £30' bundle of TV, broadband and home phone, at £360 a year, the savings are clear. If you took the products individually you would be looking at about £14.99 a month for broadband, £11 a month phone line rental, £5 a month for a cheap calls package and £15 a month for a basic digital TV package. This adds up to £551.88 a year.
Even if you substituted the TV package for a Freeview box costing £50, it would still cost £421.88 in the first year - more than £60 more expensive than the Virgin Media deal. Likewise, Tiscali TV's £19.99-a-month deal for digital TV, broadband, line rental and weekend phone calls cannot be beaten by buying the products separately.
However, if you're thinking of getting a bundle which includes a mobile phone (Orange, Virgin Media and Vodafone all offer these), check out the mobile coverage where you live first - no mobile phone operator has 100% coverage in the UK. Also, other mobile phone operators might offer better value tariffs - with more free minute and texts - than those available within a bundle.
Commitment
Bundles can have several other downsides. Most require you to commit for a year or 18 months. If you think you may change your mind or move house in that time, there will be a penalty for leaving.
Another downside of bundling is that you become reliant on one provider, so if your provider has poor customer service this could impact across all the products you have. Similarly, if the service fails you could lose it across all components and be unable to use the internet, make phone calls or watch TV until the fault is resolved.
Many people committing to bundles might be signing up for TV channels they never watch. Freeview boxes can be bought for as little as £19.99, for which you get around 30 channels for no monthly subscription.
Also, you need to make sure you are not tied into a contract with any existing supplier for any product within the bundle. If you have contracts of differing lengths, you'll need to wait for all your existing contracts to end before you switch.
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