IDEAS home Printed from https://ideas.repec.org/p/zbw/itse17/169466.html
   My bibliography  Save this paper

Triple-play (un)bundled pricing – cui bono?

Author

Listed:
  • Howell, Bronwyn E.
  • Potgieter, Petrus H.

Abstract

Bundling of broadband access with other services has been a defining characteristic of internet access markets for as long as broadband technologies have been available. Initially, cable television competitors entered telecommunications markets by bundling first voice telephony and subsequently (broadband) internet access with their television products. The fear that bundling broadband access with live sport content could distort competition in broadband markets by first facilitating the assumption of a dominant position in broadband markets and then the squeezing-out of small rivals with low levels of investment but higher costs led to the New Zealand Commerce Commission recently declining to grant clearance for a merger between the dominant pay television provider and the number two (by market share) fixed line broadband provider also the number one mobile operator (Commission 2017; B. E. Howell and Potgieter 2017a; B. E. Howell and Potgieter 2017b). We investigate the situation where a basic content package, a premium content package and broadband are offered by a firm and analyse the firm’s price-setting behaviour when customers react to a given set of prices by maximizing their individual consumer surplus. Numerical simulations with random customer valuations is used to illustrate the multiplicity of outcomes that can be expected from a regulatory intervention. We discuss issues arising from this analysis that should be pertinent to decisions in similar cases.

Suggested Citation

  • Howell, Bronwyn E. & Potgieter, Petrus H., 2017. "Triple-play (un)bundled pricing – cui bono?," 28th European Regional ITS Conference, Passau 2017 169466, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse17:169466
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/169466/1/Howell-Potgieter.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chenghuan Sean Chu & Phillip Leslie & Alan Sorensen, 2011. "Bundle-Size Pricing as an Approximation to Mixed Bundling," American Economic Review, American Economic Association, vol. 101(1), pages 263-303, February.
    2. Franco Papandrea & Natalie Stoeckl & Anne Daly, 2003. "Bundling in the Australian Telecommunications Industry," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 41-54, March.
    3. Jeffrey Prince & Shane Greenstein, 2014. "Does Service Bundling Reduce Churn?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 839-875, December.
    4. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    5. Heatley, David & Howell, Bronwyn, 2009. "The Brand is the Bundle - Strategies for the Mobile Ecosystem," Working Paper Series 4038, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. Adilov Nodir & Alexander Peter & Cunningham Brendan M., 2012. "Smaller Pie, Larger Slice: How Bargaining Power Affects the Decision to Bundle," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-25, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Howell, Bronwyn E & Potgieter, Petrus H., 2017. "Competition and vertical/agglomeration effects in media mergers: bagging bundle benefits," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168487, International Telecommunications Society (ITS).
    2. Howell, Bronwyn E. & Potgieter, Petrus H., 2019. "Bagging bundle benefits in broadband and media mergers: Lessons from Sky/Vodafone for antitrust analysis," Telecommunications Policy, Elsevier, vol. 43(2), pages 128-139.
    3. Bronwyn E. Howell & Petrus H. Potgieter, 2018. "Bundles of trouble: Can competition law adapt to digital pricing innovation?," Competition and Regulation in Network Industries, , vol. 19(1-2), pages 3-24, March.
    4. Tarek Abdallah, 2019. "On the Benefit (Or Cost) of Large‐Scale Bundling," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 955-969, April.
    5. Ritwik Raj & Mark H. Karwan & Chase Murray & Lei Sun, 2022. "Itemized pricing in B2B bundles with diminishing reservation prices and loss averse customers," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(4), pages 375-392, August.
    6. Alexei Alexandrov & Özlem Bedre-Defolie, 2014. "The Equivalence of Bundling and Advance Sales," Marketing Science, INFORMS, vol. 33(2), pages 259-272, March.
    7. Hiller R. Scott & Walter Jason M., 2017. "The Rise of Streaming Music and Implications for Music Production," Review of Network Economics, De Gruyter, vol. 16(4), pages 351-385, December.
    8. Drew Vollmer, 2022. "Bundling with Resale," Journal of Industrial Economics, Wiley Blackwell, vol. 70(4), pages 913-938, December.
    9. Carlier, Guillaume & Dupuis, Xavier & Rochet, Jean-Charles & Thanassoulis, John, 2024. "A general solution to the quasi linear screening problem," Journal of Mathematical Economics, Elsevier, vol. 114(C).
    10. Gregory S. Crawford, 2015. "The economics of television and online video markets," ECON - Working Papers 197, Department of Economics - University of Zurich.
    11. Charles Angelucci & Julia Cagé & Michael Sinkinson, 2024. "Media Competition and News Diets," American Economic Journal: Microeconomics, American Economic Association, vol. 16(2), pages 62-102, May.
    12. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    13. Marcelo Olivares & Gabriel Y. Weintraub & Rafael Epstein & Daniel Yung, 2012. "Combinatorial Auctions for Procurement: An Empirical Study of the Chilean School Meals Auction," Management Science, INFORMS, vol. 58(8), pages 1458-1481, August.
    14. Chen, Minghua & Rennhoff, Adam D. & Serfes, Konstantinos, 2016. "Bundling, à la carte pricing and vertical bargaining in a two-sided model," Information Economics and Policy, Elsevier, vol. 35(C), pages 30-44.
    15. Mark Armstrong, 2016. "Nonlinear Pricing," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 583-614, October.
    16. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2017. "Endogenous Product Boundary," Manchester School, University of Manchester, vol. 85(1), pages 13-40, January.
    17. Charles Angelucci & Julia Cage & Michael Sinkinson, 2020. "Media Competition and News Diets," SciencePo Working papers hal-03393063, HAL.
    18. Yao Luo, 2023. "Bundling and nonlinear pricing in telecommunications," RAND Journal of Economics, RAND Corporation, vol. 54(2), pages 268-298, June.
    19. Jing-Sheng Song & Zhengliang Xue, 2021. "Demand Shaping Through Bundling and Product Configuration: A Dynamic Multiproduct Inventory-Pricing Model," Operations Research, INFORMS, vol. 69(2), pages 525-544, March.
    20. Ashutosh Prasad & R. Venkatesh & Vijay Mahajan, 2017. "Temporal product bundling with myopic and strategic consumers: Manifestations and relative effectiveness," Quantitative Marketing and Economics (QME), Springer, vol. 15(4), pages 341-368, December.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:itse17:169466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: http://www.itseurope.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.