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The drivers of the substitution of individual services for bundled services: The case of Spain

Author

Listed:
  • Urueña López, Alberto
  • Gijón, Covadonga
  • Castro García-Muñoz, Raquel
  • Ureña Fernández, Olga
  • Feijóo, Claudio

Abstract

In 2007, Spanish telecoms companies began to offer bundled services. Operators started by offering phone plus broadband and phone plus broadband plus pay television bundles, and in doing so, were able to reduce aggregated prices for consumers. In addition to monetary incentives, this study examines the causes that lead consumers (individuals) and households (as economic agents) to replace individual contracts with bundled contracts including more (or fewer) services from those previously subscribed to individually. A model of demand of access to household and individual services was estimated for three services: landline phone, Internet, and pay television using a representative panel of telecoms consumers in Spain. The results show –in decreasing order- the influence of previous experience with particular services, followed by factors related to usage and factors linked with socio-demographic characteristics. Monetary incentives -contrary to common belief- play a significant but minor role.

Suggested Citation

  • Urueña López, Alberto & Gijón, Covadonga & Castro García-Muñoz, Raquel & Ureña Fernández, Olga & Feijóo, Claudio, 2015. "The drivers of the substitution of individual services for bundled services: The case of Spain," 26th European Regional ITS Conference, Madrid 2015 127187, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse15:127187
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    References listed on IDEAS

    as
    1. Calzada, Joan & Martínez-Santos, Fernando, 2014. "Broadband prices in the European Union: Competition and commercial strategies," Information Economics and Policy, Elsevier, vol. 27(C), pages 24-38.
    2. Manuel Arellano & Olympia Bover, 1990. "La econometría de datos de panel," Investigaciones Economicas, Fundación SEPI, vol. 14(1), pages 3-45, January.
    3. Srinuan, Pratompong & Srinuan, Chalita & Bohlin, Erik, 2014. "An empirical analysis of multiple services and choices of consumer in the Swedish telecommunications market," Telecommunications Policy, Elsevier, vol. 38(5), pages 449-459.
    4. Yang, Bibo & Ng, C.T., 2010. "Pricing problem in wireless telecommunication product and service bundling," European Journal of Operational Research, Elsevier, vol. 207(1), pages 473-480, November.
    5. Arellano, Manuel & Honore, Bo, 2001. "Panel data models: some recent developments," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 53, pages 3229-3296 Elsevier.
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    More about this item

    Keywords

    telecoms bundles; substitution; landline phone; broadband Internet; pay tv; triple play; random effects model;

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