Wednesday, December 27, 2017

Bundling, consumer retention and entry: evidence from fixed broadband market

Grzybowski, Lukasz ; Liang, Julienne and Zulehner, Christine examine Bundling, consumer retention and entry: evidence from fixed broadband market.

ABSTRACT: This paper answers two empirical questions. First, we analyze how fixed-mobile (quadruple-play) bundling impacts retention of consumers in fixed broadband market. Second, we assess how bundling by the incumbent operator impacts the market share and number of entrants who provide broadband services using incumbent's infrastructure. To address these questions we use a complete database of about 9.5 million subscribers to incumbent fixed broadband operator in a European country between March 2014 and February 2015. This data is combined with information on the market share and number of entrants in about 36,000 municipalities in this country. We find that consumers who bundle fixed and mobile services from the same provider are less likely to churn. Without quadruple-play bundling the annual retention of fixed broadband consumers would increase from 8.4% to 9.2%. Next, we find that the share of consumers having quadruple-play bundles with the incumbent has a negative impact on the market share and number of entrants. In the absence of quadruple- play bundling, the market share of entrants would be higher by about 6.8 percentage points. Quadruple-play bundling has also negative impact on the number of LLU entrants, which is bigger in the case of small LLU operators who cannot provide bundled offers themselves. This suggests that firms which cannot sell fixed-mobile bundles are disadvantaged in competition.

https://lawprofessors.typepad.com/antitrustprof_blog/2017/12/bundling-consumer-retention-and-entry-evidence-from-fixed-broadband-market.html

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