Time to bundle up your telecom bills?

Scott Gutknecht may not realize it, but he's ground zero in a battle between the state's largest providers of cable and phone service.

Gutknecht recently moved into a townhome in Inver Grove Heights. Both Qwest and Comcast wooed him with offers of phone, Internet and TV service for about $100 a month.

Each company is offering package deals in an attempt to win greater -- if not complete --control of a customer's wallet when it comes to telecommunications spending.

Gutknecht grabbed Comcast's $99 offer.

"That's great pricing and I didn't even know you get free long distance, too," he says.

Gutknecht choose Comcast over Qwest for two reasons.

"High-speed Internet was the most important thing and Comcast blows Qwest away as far as performance," he says. "As far as television, with Qwest you need to do the dish and I'm not a fan of having a dish. Something external on the house or the townhome."

If you buy a bundled package, you save money.

Gutknecht is part of the majority of Minnesotans who prefer cable for TV and Internet service. Traditional local phone companies, such as Qwest, are also seeing Comcast and other companies grab a bigger share of their bread and butter, the local phone market.

The range of options is mushrooming. Satellite TV providers also offer Internet service. Phone companies offer satellite TV.

All these choices have ignited vigorous competition for customers. The main battleground now involves package deals from the phone and cable companies. Some offers can save subscribers as much as $100 a month.

"If you don't bundle your services, chances are you're paying more," says Atlanta-based telecommunications analyst Jeff Kagan. "The way the carriers are striking these deals if you buy a bundled package, you save money. They are tying to get the customer to buy the bundled package because if the customer buys the bundled package, then they stay a customer."

Both Qwest and Comcast say bundling has helped them hang on to customers and dig deeper into customers' wallets. Comcast won't say what percentage of its customers bundle. But Qwest says nearly 60 percent of its customers now use at least three of the company's services.

Kagan expects most consumers won't want to change service providers once they're getting everything from one company.

"To switch television, telephone, Internet, wireless --all these different services-- it's going to be a lot more complicated for the customer to do that," says Kagan. "So, I don't think the churn will be that high. But we have to wait and see."

But nothing keeps consumers from switching providers to chase enticing price deals. Telecommunications analyst Bruce Leichtman says companies have to be careful about competing too much on price, as they try to bring more and more customers on board.

"Those who are solely coming in for deals are also likely to leave for a deal," he says. "That's the danger of going deeper into the marketplace."

Consumers face some risks, too, in bundling.

Leichtman warns that a package deal with one provider doesn't always provide the greatest savings for consumers.

"They have to look at what makes the most sense for them," he says. "Some will find a cost saving in bundling. But others don't like putting all their eggs in one basket."

Indeed, some consumers may do best by mixing and matching the cable and phone package deals.

As part of the battle, Qwest and Comcast regularly take swipes at each other in ads. Qwest has taken special delight in ribbing Comcast about rate increases. In one ad, a game show host comes to a Comcast customer's door to announce the end of her introductory pricing.

"Here's how big your cable bill is now," he gushes, as he hands her a billing envelope about as big as her door.

Comcast has sent the Slowskys to attack Qwest. The Slowskys are a pair of a tortoises who complain Comcast's high-speed Internet service is way too fast for them. They prefer Qwest's slower DSL service.

"Everything downloaded so quickly we felt rushed," Mrs. Slowsky explains.

"With DSL, we can download up to seven times slower than Comcast high-speed Internet," her husband says.

Of course, both Comcast and Qwest think the attack ads aimed at them are unfair, if not untrue. But the companies also say the intense marketing is likely to continue.

"That's a reflection of how competitive the industry has become," says Nick Kozel, Comcast's regional vice president of sales and marketing. "Our triple play has been very successful. But largely because we've been very energetic about getting the information out to the customer base."

The outcome of the battle may be a ways off. But John Stanoch, head of Qwest's operations in Minnesota says there's already a clear winner: the consumer.

"You introduce competition to the marketplace and it's consumers that will benefit from vigorous and rigorous competition," says Stanoch. "Minnesotans are seeing the benefit."

So, how will the cable-phone company battle play out? Telecommunications analyst Jeff Kagan sees them splitting the market.

"We're going to have two big competitors --the cable company and phone company-- offering the same big bundle of services," he says. "And I think 80 percent of customers will choose one or the other. And that's going to be to the consumer's advantage. Prices are going to be lower and innovation will be higher."

Among the innovations likely coming are Comcast deals that include wireless phone service. And within a few years, Qwest may start providing more than 200 channels of TV, delivered via phone lines.

But it's not clear the package deals will help the companies retain customers in the long run.

Scott Gutknecht is already thinking about what he'll do when his deal with Comcast runs out.

"I just figured after a year, I'd reevaluate the entire services and see if Qwest has something -- or a new competitor in town," says Gutknecht. "There are lots of things that can happen technology-wise. ... Because I'm a little bit price-sensitive, I may drop, say the phone service. It depends on how things look in one year."

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