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Little Innovation in Multi-Play Bundles, So Far

For most U.S. broadband service providers, the creation of a multi-play bundle of services is little more than an innovation in billing that's disguised as a new offering. Therefore, we shouldn't be surprised that research has proven that consumers are still motivated by bundle price reductions, essentially creating a new class of low-margin customers.

The current multi-play scenario reminds me of the time when one of my professional mentors responded to a suggestion that I had for a pricing-related service promotion, he said "any fool can grow market share by giving away the product, and so that's not a path to intelligent market leadership."

Telephia reports more than 31 million online homes or two out of five online U.S. households subscribe to bundled services from one provider. Bundled services can include any combination of Internet, TV, phone, and mobile phone subscriptions in a single package.

According to Telephia’s Total Communications Survey for Q2 2006, double and triple-play bundles were the most popular with consumers. The Internet/TV bundle led all other service combinations with nearly 13 million households, while more than 10 million households subscribed to an Internet/Phone combination. More than five million households subscribed to a triple-play service combination of TV/Phone/Internet, while approximately 300,000 subscribed to quadruple-play bundles.

Price is the top reason why households bundle, regardless of their bundle type. Roughly one-third of households subscribing to bundled services cite that payment convenience was a strong factor in the decision to combine their service subscriptions. Across all bundle types, reliability of service was least important.

Internet and phone subscribers rate price as 'a priority' (42.8 percent); Internet and TV (46 percent); Internet, TV and phone (53.4 percent); and Internet, TV, phone, and wireless (60.9 percent).

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