Service Platforms > Teligen Tariff & Benchmarking

Just want unbundled broadband? Be prepared to pay a premium

by Josie Sephton | 4月 12, 2012

The announcement earlier this month that Verizon in the US would no longer be selling DSL services to new users unless they also purchased a landline garnered strong reactions from the market. Yet the decline in genuinely unbundled broadband services is something the Teligen division of Strategy Analytics has been observing for some time. Data from the March 2012 update of Teligen's Fixed Broadband Price Benchmarking Service reveals that half of all residential fixed broadband packages are bundled, i.e. they are combined with telephony, television or both.

While bundled services typically cost more than unbundled services - in the case of basic triple play options (which include broadband, telephone and television), for example, these cost on average USD20-25 per month more than standalone broadband services - this is not always the case.

One example of this is UPC in Ireland, which charges a premium for broadband that is not purchased as part of a bundle. This means that some bundles service options are cheaper than standalone broadband. A 50 Mb/s standalone service from the provider costs around PPP (Purchasing Power Parity) USD 57 per month, compared to PPP USD 50 for the same service bundled with phone and included minutes. This type of approach is increasingly common, and while it may seem to imply a good deal, it is coercing customer into taking services they might not actually want.

While bundling can work to the customer's advantage from a cost and contract management perspective, it is not always the case, as bundled packages can be inflexible and include elements that are not required but which will have to be paid for. Moreover, as we have highlighted in a previous post, multiplay does not always compare well on price to services purchased singly. Some of our analysis has shown a premium of almost 50% for multiplay as compared to singly purchased services. In such scenarios, it is highly debatable whether the benefits of a single supplier/single bill are sufficient to offset such a significant increase in cost.

From a supplier perspective, bundling makes perfect sense - it increases ARPU, creates greater customer stickiness, and allows greater opportunities for upsell, as well as allowing ISPs to explore new service delivery and pricing models - and this is why we are seeing such an increase in bundled services. Going forward, it will become increasingly difficult to 'just buy broadband', and for those ISPs that offer it, the likelihood is that it will be priced at a premium.

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