Wired In to One-Stop Shopping
Jones Takes First Steps in Offering Phone, Cable and Internet
Service
By Paul Farhi
Washington Post Staff Writer
Monday, November 23, 1998; Page F05
It may be the Holy Grail of consumer telecommunications. For years,
business executives have talked about providing "one-stop shopping" --
offering phone service, cable TV connections and Internet hookups for one
price, and on one monthly bill. AT&T Corp., among others, wants to do it
so much that it's willing to spend $48 billion to acquire a cable company,
Tele-Communications Inc.
But while the concept is attractive, executing it can be hard work. Exhibit
A: Jones Communications' system in Alexandria.
Jones Communications of Maryland Inc., based in Lanham, the biggest
cable TV provider in the Washington area, has been a pioneer in testing
the market validity of one-stop shopping. In June 1996, just four months
after a new federal law permitted it, Jones became the first cable operator
in the country to win state approval to offer local telephone service over its
cable TV lines.
After a $30 million upgrade of its Alexandria system, Jones, a division of
Jones Intercable Inc., headquartered near Denver, began marketing
packages of phone, cable and high-speed Internet access last year.
Raquel Powell, 29, was one of the first to bite. She had been a longtime
cable customer of Jones when the company approached her last January
about providing her phone service. "I was a little hesitant at first because all
I had known was Bell Atlantic," says Powell, a government contract
specialist.
But Jones has performed flawlessly, she says. In 10 months, the only
problem she's experienced has been a billing screw-up -- caused by
AT&T, her long-distance provider, she says. Jones's customer service
representatives even worked with AT&Tto resolve it.
Powell estimates she's saving $10 to $15 per month on her phone bill,
compared with what she used to pay Bell Atlantic. Jones charges $42.80
for combined local phone and expanded basic cable service. The price
includes call waiting, three-way calling and interior wire maintenance, all of
which would cost extra if Powell had remained with Bell Atlantic. Says
Powell, "I'm very pleased."
But here's where this sunny picture starts to get a little cloudy.
Jones can't provide the services Powell gets to just anyone in Alexandria; it
hasn't expanded beyond the city's apartment buildings and other
"multi-family dwelling units" because it's not cost-effective to do so. In fact,
it could be years before cable companies are able to profitably provide
phone connections to single-family households.
And there have been some snafus along the way. Jones has temporarily
suspended signing up customers for one of its services -- high-speed
Internet access -- due to a complicated legal dispute with Bell Canada, a
part-owner of Jones. The company has provided service to those it initially
signed up, but won't take new orders again until January.
In other words, one-stop shopping can be nice, if you can get it.
Two years after it began service, Jones says, it has signed up some 8,000
cable-phone customers or Internet customers in the area. Most of those
are in Alexandria, but the total includes customers in Prince William and
Prince George's counties, where Jones extended phone service and limited
Internet access earlier this year.
To put that figure in context, Jones provides cable-only service to some
430,000 households throughout the region -- which means that only 1.8
percent of its existing customers have signed up for its new phone and
Internet services.
Still, Jones says it is pleased with its progress; its multi-service subscriber
base has more than doubled this year, says Drew Sheckler, Jones's senior
vice president of operations for the region. In buildings where Jones can
provide phone service, he says, some 25 percent of residents have signed
up, a "spectacular" rate, according to Sheckler.
Indeed, the company's major challenge may not be the technological kind,
but the marketing one.
"People don't automatically think of cable as a resource for telephone
services," Sheckler says. "People are used to thinking only about getting
phone service from Bell Atlantic. . . . [But] our experience says that once
we get in front of people -- and I mean that literally, at a [sales] party or
with door-to-door sales -- our [sign-up] rate is very high," up to 80
percent.
At the current rate, Sheckler projects that Jones -- which soon will be
acquired by another cable giant, Comcast Corp. -- will start earning a
profit from its phone-and-Internet businesses by 2002.
But it's not clear whether Jones will be able to sustain its pace, given that
it's not the only one with one-stop-shopping ideas.
Most prominently, Bell Atlantic Corp., which dominates the East Coast
phone market, is aiming to offer its millions of customers Internet access
and video as well as phone service. It recently unveiled a high-speed
Internet access service that competes with those offered by cable
companies, and it markets DirecTV's direct-broadcast satellite television
services to customers.
There are smaller outfits, too, such as Starpower Inc., a venture
part-owned by Potomac Electric Power Co. that has signed agreements to
provide phone, video and Internet services to residents of the District and
Gaithersburg beginning next year. (The company eventually wants to
provide services throughout the Washington area.)
Meanwhile, OnePoint Communications, a privately held firm based in
Washington, has begun selling Bell Atlantic's phone service to complement
the video service it provides to apartment owners on the East Coast.
In January, says the company's president, John Norcutt, OnePoint will
begin offering Internet connections to apartment buildings it serves in the
District and Howard and Prince William counties, taking on Jones directly
in the latter location.
Traditional cable companies such as Jones "have spent the past 20 years
with the mentality of monopolies," says Norcutt. "I think they're a little
more guarded and cautious about rolling out new services. But competition
is coming. That's a reality for all of us."
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