Getting Connected: How To Untangle All Those Offers

By Lev Grossman

In the Kronberg household, Michelle writes the checks and Harvey handles the telecommunications. They operate two small home businesses, Kronberg's Flags and Flagpoles and a local newsletter, and though Harvey is his own boss, he has to keep a lot of other people happy--his cell-phone company, his long-distance carrier, another phone company for the fax line at his office and still another for local phone service. The Kronbergs live in Texas, a state that went in for deregulation in a big way, so not only do they have to choose from multiple local phone services, but they also have more than one electric company vying for their attention. Says Michelle: "I pay bills for every company there is!"

It's almost enough to make you nostalgic for Ma Bell. Twenty years ago, we had no choices at all. There was one electric company, one phone company, no Internet, no cell phones. Prices were high, but there were only a few bills to pay each month. Now there are 2,040 local phone companies in the U.S., 928 long-distance companies and 858 cell-phone service providers as well as 130 purveyors of broadband Internet access. We're besieged by telemarketers pitching incompatible technologies and offering us rate plans that read like the repair manual for the space shuttle. It sometimes seems to take a triple major in economics, network engineering and contract law just to stay intelligently connected to the rest of the world.

Bobby Schaefer, 50, of San Diego is no computer geek--she designs and knits sweaters for a living--but when she ordered broadband Internet access, she thought she had done her homework. She talked to her friends and the employees at a local CompUSA store to figure out which kind of service--cable modem, digital subscriber line or satellite--made the most sense. But when she finally made the call, she was plunged into a netherworld of bureaucracy. Charges appeared on her phone bill even before she had officially ordered DSL, just for having asked about it. The company from which she ordered it was the same one that provided her phone service, and eventually, when she didn't pay for DSL, her phone went dead.

Schaefer had just learned that her grandson had cancer, and she had to get a cell phone to stay in touch. "My stress level was through the roof," she says. The experience has completely changed the way she runs her household. "I feel like an attorney," she says. "I used to spend about two hours per week on my bills. Now it's tripled. I'm looking through everything."

Meanwhile, the telemarketers' sales pitches, once based mostly on price, have dived deep into the fine print. Says Dwight Paul, 62, a retired airline pilot: "They seem to play on our inability to understand all these ifs, ands or buts. It's like the old snake-oil salesmen who used to come to town."

Only 21% of U.S. households have the same company for local and long-distance phone service, and only 6% get their phone and Internet services from the same firm, according to a survey by the Yankee Group, a consulting firm. "What we've ended up with," explains Rob Rich, executive vice president of the Yankee Group, "is this complex Tower of Babel that looks very appealing in terms of the basic services it provides but is just mystifying to consumers."

Why is the system so complicated? Because it was invented in the same city that brought you the tax code. When the government broke up AT&T in 1984, it created a regulatory environment designed to promote competition and discourage monopolies. And it does just that, but at a price--a profoundly fragmented telecommunications industry that's tough for consumers to navigate. Antitrust regulations make it difficult for single companies to offer simple, all-embracing plans with multiple phone and data services on one bill. The result is lots of healthy, all-American competition--and lots of headaches.

Americans have a unique way of dealing with new technologies. If there are two competing approaches to a problem, we tend to throw them both out there and let the market decide which one is better instead of legislating a single standard. Think eight-track and cassette, Betamax and VHS. That's why Europe and Asia have a single standard for cell-phone service, for example, while the U.S. supports four competing and incompatible standards--CDMA, GSM, iDEN and TDMA. (Even people who peddle cell-phone service don't know what those letters stand for.)

The good news? There are free resources on the Internet that can break down all this information for you and make the choices clearer. Visit websites such as getconnected.com and lowermybills.com give them your area code or zip code, and they will almost instantly generate charts of available services in your area--long distance, wireless, Internet, gas and electric--neatly sorted by price. Some companies pay fees for more prominent placement, but otherwise the information is free of bias. Tools like these can save consumers hours of research and hundreds of dollars a year. In a way, it's poetic justice. Some of the peace of mind the Internet taketh away, it also giveth back. That is, if you can get your Internet connection working.

--With reporting by Hilary Hylton/Austin, Laura A. Locke/San Francisco and Jyoti Thottam/New York

With reporting by Hilary Hylton/Austin, Laura A. Locke/San Francisco and Jyoti Thottam/New York