KPMG Sees Phone Price Squeeze

Big telephone companies are trying to boost revenue by introducing products and services, but many consumers may be unwilling to shell out money for them, according to KPMG LLP, the audit, tax and advisory firm.

That’s the conclusion of one of two new telecom studies by the consulting arm of KPMG titled Consumers and Convergence, slated to be unveiled March 20 at the TelecomNEXT conference in Las Vegas. “Attempting to exploit converged services purely to squeeze more cash from consumers on a traditional subscription model will not work,” says Carl Geppert, a partner in KPMG’s Communications and Media Practice, in a summary of the studies. The study say the firms must develop new business models.

One study surveyed telecom executives; the other queried 3,600 cellphone customers around the world. Among North American consumers that responded, 37% said they would not pay a premium over and above their current bill for converged services, and another 20% indicated that they would spend only up to 10% more than their current bill.  Geppert says in the report, “Service providers should use enhanced and bundled services to deepen customer relationships and allow other parties to reach users, delivering a loyal subscriber base that is attractive to advertisers and digital commerce partners.”—J.M.H.