Wireless phone companies are following cable's lead, initially selling a basic service that allows people on the go to communicate. Now cell phones regularly provide Internet access, and some even allow users to watch TV and play video games. Each service a customer adds gives the company a new revenue stream of a few dollars a month.
Wired phone companies are competing with their own bundle of services. The regional phone giants, including Verizon Communications Inc. and SBC Communications Inc., offer telephone, high-speed Internet service and television channels. The phone companies have no television programming of their own but are able to offer consumers satellite TV service through partnerships with DirecTV and Dish Networks.
Cable, telephone, Internet and other subscription services are also benefiting from changes in the way people pay their bills. Many consumers have fees -- for their gym membership, their online professional journal, their newspaper delivery -- directly applied to their credit cards, which they in turn pay on a monthly basis. Others take advantage of automatic-debit programs that allow companies to pluck money right from the customer's bank account. After they sign off on the first bill, some consumers may not notice the monthly fee unless they take a close look at their bank statements or credit card bills.
Cox initiated an automatic debit system 2 1/2 years ago. Cox's Pugliese estimates that 12 percent of the company's customers use the system. "Obviously this takes the late payment and the nonpayment out of the way. These are great customers for us. It takes all the hassle out of paying the bill," Pugliese said.
But there is also growing concern among some economists that the introduction of expensive new technology services is dividing the nation into digital haves and digital have-nots.
One often-referred-to example is the introduction of variable toll roads -- so-called Lexus lanes. On highways in and around San Francisco and San Diego, special lanes are set aside for cars that carry devices that can be read by electronic tollkeepers. The cost of driving on the road varies based on the number of cars that have passed through the toll. The tolls regulate the number of cars by increasing the cost as more enter the lanes. Signs warn drivers they have a choice between paying a higher fee to use highway lanes largely free of congestion or sitting in traffic and watching the other cars speed by.
"We are creating a two-tiered society, not just the way we pay bills or drive on the highways," said Jeremy Rifkin, president of the Foundation of Economic Trends, author of "Age of Access," a book that argues the world is being transformed into a pay-as-you-go society.
Rifkin points to the proliferation of tree-lined gated communities where 40 million Americans now have, in effect, their own private parks with swimming pools and bike paths. Until the mid-20th century, parks were largely viewed as public spaces. Rifkin claims that the move away from free radio and free television toward subscription models is just one example of a broader trend, with more Americans finding themselves paying premiums for traditional services such as education and health care.
The barriers are highest for consumers on the lowest economic rungs, those without credit or credit cards, according to Rifkin. "Credit cards are what open the door for those who can afford to live in this society," Rifkin said.
The number of consumers who have access to credit cards and electronic bill-paying services is large and growing. According to Synovate Inc., a research firm that follows the credit card industry, 75 percent of all households have access to a credit card. And more than half of people under 35 have paid at least one bill through online banking services.
Lynda Maddox, a professor of marketing and advertising at George Washington University, said consumers do get benefits from new services and the various electronic gadgets that are landing in our pockets and on our desktops and set-tops. "These are electronic maids and butlers," Maddox said, noting that services such as the TiVo digital recorder allow users to record television shows without fumbling with cassettes or programming a VCR to turn on at a specific time. After initial purchase of the TiVo machine, the service costs subscribers $12.95 a month.
Maddox recently acquired a phone that not only makes calls but also sends and receives e-mail and serves as a personal organizer. "I wanted to be able to access e-mail at any time, anywhere. That gives me great freedom," Maddox said.
Maddox's phone retails for more than $400, but even the most expensive digital devices are often sold at subsidized rates. The value of a two-year contract that requires a user to pay $50 a month is more than enough to make up for the discount on the device.
There is nothing unique about technology companies that are able to boost their revenue by adding services to basic products. Maddox said that just last week, she went to a sandwich shop owned by a national franchise. She tried to order a plain sandwich with no trimmings. "The person behind the counter looked at me like I was crazy." The bottom line, said Maddox: "We are becoming the add-on society."
