Does Service Bundling Reduce Churn?
AbstractWe examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three "triple-play" services. However, the effect is only "visible" during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.
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Bibliographic InfoPaper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2011-05.
Date of creation: Nov 2011
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Bundle; Service; Churn; Triple Play; Telecommunications; Cable; Broadband; Telephone; Screen;
Find related papers by JEL classification:
- L0 - Industrial Organization - - General
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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