I couldn't help but get a kick out of this release from Cablevision from yesterday...
Cablevision Systems Corporation (NYSE: CVC) today announced that its Optimum Voice digital voice-over-cable (VoIP) service had surpassed the 250,000-customer milestone. The fastest-growing facilities-based VoIP service in the nation, Optimum Voice on average has been adding approximately 1,000 new customers per day within Cablevision's New York metropolitan area system.
"Optimum Voice has established itself as a value-priced and highly-reliable voice service in the New York metropolitan area, and the consumer response has been outstanding," said John Bickham, Cablevision's president of cable and communications. "Clearly, a diverse and growing base of customers have embraced the ability to make unlimited calls across the U.S. and Canada at one low price, while taking advantage of a growing list of innovative calling features."
I mainly take issue with the bolded parts. First, they claim they are the "fastest-growing facilities-based VoIP service in the nation". Ok, I'm not sure if I buy that, but OK, I'll take them at their word.
But then they BLEW IT when they said Optimum Voice has established itself as "value-priced", when in fact they charge one of the priciest monthly fees of any VoIP provider - $34.95/month!
On top of that, the press release claims that Cablevision announced that the standard monthly price for Optimum Voice would remain unchanged at $34.95 in 2005.
Wait a second here. Everyone else in the broadband VoIP world is in a price war and Cablevision isn't joining the party? What gives? I guess there 250,000 people who don't mind over-paying for phone service. It's the same old story...
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Tom, I respectfully disagree:
See my Blog for details:
Tom Keating’s blog entry today titled Cablevision Optimum Voice could have just as easily been titled Cablevision’s Optimum Profit as he details how the company claims they have established themselves as value priced leaders but at the same time they are perhaps the highest priced VoIP provider around.
So should they listen to Tom and lower their price? No, in my opinion. I say this because the company has access to a virtually unlimited supply of remnant advertising. They have likely spent the equivalent of 100 million dollars this year alone based on my TV watching “research.” (I think I finally found a way to expense my cable bill :-)
In addition, customers want one bill and this is a way to provide that. They also want minimal support issues and dealing with a single company is easier than dealing with more than one.
Finally, a price war is good for consumers and bad for an industry. You want to ensure VCs will run away from VoIP screaming then mention a price war. You want to make sure that top talent doesn’t decide to develop products in VoIP, then mention a price war. Prices will decline over time as new entrants are pouring into the space.
In my opinion Vonage and CallVantage are crazy to engage in any cut-rate pricing because they have established themselves as premium brands. BMW and Mercedes don’t get into price wars. Market share is great but profit is what separates the adults from the kids in this game.
Sure, Cablevision can get away with the expensive $34.95/month price point if they bundle it with other services and then discount it if you sign up for multiple services.
The problem is that they AREN'T bundling and discounting from what I can tell. I used to be a Cablevision customer 2 years ago and back then it was $34.95. I don't believe they discounted it even though I had high-speed data and cable TV with them.
In many case, you're better off using Cablevision for TV and broadband Internet and then signing up for Packet8 for only $19.95/month and save the $15. Even Vonage is $10 cheaper at $24.99.
Cablevision's "claim" is that since it isn't packet telephony (VoIP), they can control the QoS and the reliability and thus charge more money for this "guarantee". Is it worth the extra $15 for the "guaranteed" QoS/reliability? maybe for some. For me, I'll stick with the Internet, take my chances and save the $15/month.
Now if Cablevision offers voice & data for say $40-$50/month, then maybe it would be worth it. (I'll leave video/TV off the table since there are just too many variables, i.e. HBO, Showtime, Family cable, Basic Cable, etc.)
Further, just wait until Triple Play takes off from the phone companies which will put further pricing pressure. The cable companies will have to respond to lower price points. Maybe not today, maybe not tomorrow, but it is inevitable.
Some more extended comments on my blog. But two basic points. One, Cablevision's prices aren't nearly as high as they appear as many customers aren't paying the standard rate (Cablevision has some very attractive service bundles). Two, to the extent that they are reaping high revenues, I think it means that there really is a high value placed on QoS (and company name recognition) by customers who haven't yet had much direct experience with VoIP, i.e. nearly everybody.
I am thinking about signing up for Cablevision's Optimum Voice and getting rid of Verizon, who has been nothing but problems since I switched over to them. Is there anyone reading this that has Optimum Voice and can tell me if they're satisfied with the service?
Actually in Cablevision's defense, if you have all 3 services from them TV, Internet, & Phone you get a $20 credit off your bill every month that is permanent! It comes off the Optimum Voice which makes it $14.95 a month blowing all the competitiors clear out of the water!! It is not for just a year or two either, I have had it for several!! Plus what I hear people wait for a service call (which I have had only needed 3 in the last 5 years) I would never leave!