• by Joe Mandese , March 8, 2005

On Friday, during the closing day of Madison Avenue's annual media conference, the government's top media technologist predicted electric utility companies might transform the telecommunications industry providing broadband services anywhere there is an "electric pole," and transmitting data to anything that "uses electricity." If that proves the case, it was not evident in a recent survey asking consumers whom they wanted to receive their telecommunications services from. Asked whom they believe would provides the best service and value for bundled TV, phone and Internet service, U.S. consumers overwhelmingly selected TV service providers including cable system (29 percent) and satellite TV (22 percent) operators, according to results of an annual study scheduled to be released today by Knowledge Networks/SRI.

Local phone companies placed a close third (21 percent), followed by Internet service providers (19 percent), but electric utility companies (8 percent) didn't exactly show the juice. "Based on the response to this survey, utility companies don't appear to be much of a factor, at least not yet," said David Tice, vice president-client service at KK/SRI. He noted, however, that the concept of telecommunications service from utility companies is still relatively knew - the FCC only recently authorized broadband over utility lines - and that the results likely reflected "an incumbent issue." But some incumbents appear better positioned than others, according to the results.

"People seem to be much more accepting of getting their telephone service from a cable service provider, as opposed to the other way around. TV providers definitely seem to have the advantage in a bundled world," he said.

The findings also reveal a potentially significant inflection point for telecommunications services, and what may be the beginning of a consumer spending saturation point. While the average U.S. households indicated more upside to what they are willing to pay for new telecommunications services - $7 more per month to an average monthly outlay of $52 - broadband households were the least price elastic, willing on average to pay only another ten cents per month.

"They're tapped out," said Tice. "The broadband homes seem to have reached a point where they're paying enough for what they're getting and even additional services aren't going to increase that by much."

Which Would Provide the Best Service and Value for Bundled TV, Phone and Internet

Source: Knowledge Networks' Home Technology Monitor.