Bundling and Consumer Churn in Telecommunications Markets

Abstract

In this paper, we analyze how fixed-mobile (quadruple-play) bundling impacts the decision of consumers to churn telecommunications services. We use a database from an European operator of fixed and mobile telecommunications services which includes information about 9.6 million fixed broadband subscribers and 14.2 million mobile subscribers between March 2014 and February 2015. These data is combined with socio-demographic characteristics from each municipality in this country. We find that consumers who bundle fixed and mobile services from the same provider are less likely to churn. Without fixed-mobile bundling the annual churn of fixed broadband consumers would increase from 8.4 to 9.2%. Furthermore, the consumer churn in the mobile market would increase from 11.5 to 13.1%. We conclude that in the current competitive environment in the country considered, bundling has a moderate impact on consumer retention on both fixed and mobile networks.