The death of competition in the 'big bundle' era

Cable operator Comcast said this week it is getting into the cellular business and, while the news was expected, it still heralds a new era: The Big Bundle Era.  This new era will likely change how enterprises and consumers acquire communications services, and not entirely for the better.

Rather than competing directly with existing cellular operators, Comcast is offering cellular service over Sprint's network with the intention of solidifying its hold on existing cable customers.  This is the most highly visible salvo, so far, in a trend that should really start to take off in 2007: Large providers offering "big bundles" of fixed and wireless broadband and landline and mobile voice service.  

Individual users and enterprise's will be able to get all the services they currently buy from multiple vendors from a single vendor.  They'll pay for all the services with a single bill, which is convenient, as is the fact that, at some point in the future, you'll have a single log-on no matter where you are and what access technology you're using.  There also could be total transparency among the various services and services.  You won't know, for example, whether you are speaking over the cellular network or using voice-over-IP.

There also are great benefits for the providers, and that's where my trepidations come in.  Currently, you might acquire services from some combination of a company like Comcast for cable access, an independent Internet service provider (ISP) for access at home, a cellular operator for mobile voice and data and a regional Bell operating company (RBOC) or a smaller competitive telecom operator for landline voice.

In the Big Bundle Era, big RBOCs like AT&T or the Sprint/cable cabal that provide all those services gets all your business.  But what happens to the smaller telecom operators and ISPs?  My guess is these smaller guys, who can't offer big bundles, will have a much tougher time as the big bundles offered by the big players catch on.  Initially, there might be more competition as the big guys compete among themselves and try to push the little guys out of the way.  But over time, it will mean less competition, fewer choices and, eventually, higher costs.  

So while this week's Comcast announcement was, in itself, no big deal, it means things could be changing -- and not necessarily for the better -- for all users of communications services.