Shaw dials back on bundling home phone with its other services

Canada's telecom companies love to bundle.

For decades theirstrategy has been to sell themaximum number of services to Canadianslandline, cable, internet andmobile that they canwrapup in anice 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 ismocked 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 ConvergenceConsulting. 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 arenot expected to have a land lineat 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 officerJay Mehr saidfor many years Shaw pushed its triple play bundle: television, internetandhome 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 phoneif 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 oftelecom industry websitecartt.ca. "Right now most of the cable companies across North America do their level best to sell everybody everything."

Indefense of the home phone

Shaw said that people with kidsbaby boomers and GenXers still have home phones, or87 per cent, according toMehr. Roughly 75 per cent of millenials with kids also have home phones, but numbers show theyounger the customer, the less likely they are to have a landline.

Mehr said there was no pointintrying to sell a university student a bundle with a landline, but insteadtry 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 offermargins on landlinesbetween 80-90 per cent.

"There are anumber of people, and I include myself in this as well, who are keeping a wired phone linefor 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 were13,000 fewer subscriptions in 2013, and95,000 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 bundlesimply because we have got a taste for segmented products.

"We're tired of paying for things that we don't use," said Levy. "We arelooking for controlover what we consume and how we consume it."