The Role of Triple- and Quadruple-Play Bundles: Hedonic Price Analysis and Industry Performance in France, the United Kingdom and the United States

36 Pages Posted: 16 Aug 2015

See all articles by Agustin Diaz Pines

Agustin Diaz Pines

Ecole Polytechnique, Centre de Recherche en Gestion; European Commission

Alexia Gonzalez Fanfalone

Toulouse School of Economics (TSE)

Multiple version iconThere are 2 versions of this paper

Date Written: August 15, 2015


Communication providers may use bundles of different services (fixed telephony, broadband, pay-television, mobile services) to leverage market power or increase switching costs for consumers, but also as an efficient way to allocate fixed costs across services, reduce offer complexity and provide unified billing and innovative features. Bundles are increasingly important and raise challenges for regulators and policy makers. While the economic literature has extensively addressed bundling, the literature on hedonic price analysis for communication services is relatively limited, and builds on previous applications exploring the relationship between prices and the bundle’s features for automobiles, personal computers or houses (OECD, 2006). The present paper includes two main exercises to show the potential implications of communication bundles for consumer choice and industry performance. First, it estimates a hedonic price function for triple- and quadruple-play communication bundles of the largest operators in France, United Kingdom and the United States. Second, it explores relationship between bundling penetration and firm-level industry performance data (revenues, profits, etc.) in these countries.

Section 1 includes a hedonic price analysis model using OLS econometric analysis of 300 offers (April 2014) from 15 operators in France, the United Kingdom and the United States (including standalone, double-, triple- and quadruple-play offers). The collected variables include service price per month, download speed, contract length, data allowance, TV quality index, fixed calls, and mobile plan features. As a novel approach, the quality of the television content has been modeled using an index that takes into account premium content, such as sports and movies, and the number of channels.

Section 2 explores the relationship between bundle penetration and firm performance by using a panel of quarterly financial variables from 2010 to 2014 of 13 communication operators. The explanatory variables used in the regression analysis include revenues, profits (EBIT/EBITDA), investment and market share, controlling for country and time fixed effects. As expected, triple-play bundling is more predominant in France than in the United States or the United Kingdom, other factors being equal. Furthermore, the results show that, while revenues (operator’s size) have a very minor (positive) effect on triple-play bundling penetration, investment and market shares prove statistically significant (the former displaying a positive effect, whereas the latter a negative impact on bundling). Nevertheless, given the caveats identified in the dataset and potential endogeneity problems, these results are deemed only exploratory and need to be considered with caution.

Keywords: financial indicators, bundles, telecommunications, hedonic prices

Suggested Citation

Diaz Pines, Agustin and Gonzalez Fanfalone, Alexia, The Role of Triple- and Quadruple-Play Bundles: Hedonic Price Analysis and Industry Performance in France, the United Kingdom and the United States (August 15, 2015). Available at SSRN: or

Agustin Diaz Pines (Contact Author)

Ecole Polytechnique, Centre de Recherche en Gestion ( email )

Route de Saclay
Palaiseau, 91762

European Commission ( email )

MADP 27/014
Brussels, Brussels 1049
+32 2 297 5573 (Phone)

Alexia Gonzalez Fanfalone

Toulouse School of Economics (TSE) ( email )

21 Allee de Brienne
Toulouse, 31000
+33659596527 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics