Does Service Bundling Reduce Churn?

Competition Policy and Antitrust, Broadband, Networks and Infrastructure and Networks, the Internet, and Cloud Computing

Article Snapshot


Shane Greenstein and Jeffrey Prince


Journal of Economics & Management Strategy, Vol. 23, No. 4, pp. 839-875, 2014


This study considers whether firms that sell telecommunications services as a bundle find it easier to retain customers. The data shows that bundling does reduce “churn” for pay television, broadband, and telephone service.

Policy Relevance

Bundling help firms maintain revenues from shrinking markets. Policymakers should not intervene with the decision to bundle.

Main Points

  • “Bundling” occurs when a firm sells two or more services in a package for a single price. From 2007 to 2009, almost all cable television operators offered a bundle of telephone, broadband, and pay television service (satellite or cable) known as “triple play.”
  • “Churn” is a customer’s abandonment of a service provider; this paper asks whether consumers that purchase a bundle of services are less likely to “churn.”
  • If bundling reduces churn, bundling will affect competition in video markets.
    • Firms could gain market power and raise prices.
    • Bundling creates barriers to entry, as new entrants find it harder to attract customers.
    • Bundling could help keep certain markets from shrinking.
  • The data shows that bundling does reduce churn for telephone, broadband, and television service, however, the effect was not the same every year for every type of service.
  • The effect of bundling was most noticeable for markets in turmoil, for example, when customers began to drop some kinds of service; the role of bundling in keeping certain markets from shrinking is very important.
    • The purchase rate of pay television in 2009 was 2.2% higher for bundled households.
    • By bundling, the cable companies saved about $259 million in revenue.
  • Consumers consider broadband a substitute for television; in 2009, as it became possible to stream more video online, many more households bought broadband but not pay television.
  • Bundlers had lower income and education levels than those that purchase services separately.
  • Whether bundling leaves consumers better or worse off overall depends on benefits that consumers obtain with the bundle; generally, policymakers should not intervene in firms’ bundling decisions.


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