Does Service Bundling Reduce Churn?

54 Pages Posted: 30 Nov 2011 Last revised: 13 May 2014

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: April 2013

Abstract

We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three “triple-play” services. The effect is only “visible” during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.

Keywords: Bundle, Service, Churn, Triple Play, Telecommunications, Cable, Broadband, Telephone, Screen

JEL Classification: D12, L96

Suggested Citation

Prince, Jeffrey and Greenstein, Shane M., Does Service Bundling Reduce Churn? (April 2013). Available at SSRN: https://ssrn.com/abstract=1966221 or http://dx.doi.org/10.2139/ssrn.1966221

Jeffrey Prince (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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