Shaw dials back on bundling home phone with its other services

Canada's telecom companies love to bundle. 

For decades their strategy has been to sell the maximum number of services to Canadians — landline, cable, internet and mobile — that they can wrap up in a nice promotional price and hope that we don't flinch when the promotion ends and the price goes up.

That strategy is no longer working very well, especially when it comes to the lowly landline that is mocked by millennials, loved by their parents and questioned by everyone in between.

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In 2014, the number of households in Canada with a land line dropped by four per cent, according a report released this week from Convergence Consulting. That works out to 477,000 homes. Convergence expects the trend to continue. By the end of this year, nearly a third of Canadian homes are not expected to have a land line at all.

This is a trend that has been eating away at Shaw Communications subscriber numbers, so it decided to no longer push the issue.

In a conference call with analysts, Shaw's chief operating officer Jay Mehr said for many years Shaw pushed its triple play bundle: television, internet and home phone. It was priced in a way that made it hard to say no, even if you didn't want all three services.

What Shaw found was that it could sell the triple play with a promotional price, but when the promotion ended after six months, customers would overwhelmingly disconnect their home phones.

Now Shaw is promoting a television and internet bundle on its website, although it also offers a bundle with home phone if customers want a landline.

"We want our customers to take the services they value," said Mehr in the conference call. "And as a result, we had an understandably tough home phone quarter.

"They're the first cable company that I'm aware of to pull apart their own bundle," said Greg O'Brien, the editor of telecom industry website cartt.ca. "Right now most of the cable companies across North America do their level best to sell everybody everything." 

In defense of the home phone

Shaw said that people with kids — baby boomers and Gen Xers — still have home phones, or 87 per cent, according to Mehr. Roughly 75 per cent of millenials with kids also have home phones, but numbers show the younger the customer, the less likely they are to have a landline.

Mehr said there was no point in trying to sell a university student a bundle with a landline, but instead try to sell that student more internet.

O'Brien said he doesn't think the end is nigh for the home phone, in part because it is so cheap for the telecoms to offer margins on landlines between 80-90 per cent.  

"There are a number of people, and I include myself in this as well, who are keeping a wired phone line for back up and for 911," said O'Brien. "You call 911 on your wired phone and they know exactly where you're calling from." 

"Eventually you can see the end of a wired phone, but for the next little while, it's going to be a reasonable product for the companies to hold onto."

Bundles coming to an end

That may be the case, but what about the bundle?

In 2013, net television subscriptions started to shrink in Canada. There were 13,000 fewer subscriptions in 2013, and 95,000 fewer in 2014, according to numbers from Convergence. The CRTC has mandated that television packages will be unbundled later this year, but it's not clear that will stem the tide.

Industry analyst Carmi Levy easily sees the end of the bundle simply because we have got a taste for segmented products.

"We're tired of paying for things that we don't use," said Levy. "We are looking for control over what we consume and how we consume it."