Telephone calling plans see increased churn
Churn has increased substantially now that many telephone companies are offering combined long-distance and local calling plans according to this WSJ story (subscription required). MCI loses up to 50% of its new customers within the first six months. Yikes...I'm wondering how this compares to other subscription models, such as the ones used by cable companies, or Netflix and newspapers etc.
"Churn has increased," says Wayne Huyard, president of mass markets for MCI. MCI started the race in April 2002 when it launched The Neighborhood, the first widely available flat-rate bundle. "We are entering an era of commoditization for local and long-distance. Anyone can see that."
The Neighborhood, which costs $50 to $60 a month in most areas, loses about half its new customers within the first six months, though turnover drops after that. AT&T says its churn is substantially lower, but declines to be specific. In fact, none of the carriers would say what their churn rates are or how much it costs them. Adam Quinton, a telecommunications analyst at Merrill Lynch, says turnover in bundled plans offered by Bell rivals is as high as 8% a month -- or nearly 100% in a year -- in some highly competitive areas