Last month, when writing about how the cable companies were moving big time into VoIP, we thought the smartest thing they could do was to drop the price on VoIP drastically and bundle it with other options. This way, they'd get customers using all three elements of the triple play (voice, video and data) when studies have shown that for each additional element in the bundle that customers have, customer churn gets cut down significantly. This makes sense, because having to change all three pieces may seem like a lot more of a pain than just switching one. The other benefit to drastically cutting VoIP prices is that it would hit the phone companies (the cable co's main competitors) right where it hurt the most -- the cash cow business they've been relying on to keep them going. Now, Cablevision is following that plan perfectly. They're offering a triple play bundle that includes free VoIP for the first year (that is, it's the same price as if you just got cable TV and broadband internet access from them). This is a bit surprising, as it seemed likely the cable companies would try to squeeze every last penny out of any offering, rather than realizing the competitive situation. It appears Cablevision does understand the situation -- though, it may not last long if worried analysts keep complaining and someone gets the idea that this is unfair competition. However, analysts who think that a price war will be avoided aren't really paying attention.
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