To bundle or not to bundle mobile, that is the question

Ronan Dunne, the CEO of O2 UK, said during a television interview at Mobile World Congress in February that there was a good case for a standalone mobile champion" in the UK. Indeed, he argued that a mobile-focused player would be "essential" to ensure that consumers have "real choice", while other UK operators such as a combined BT and EE increasingly adopt convergence strategies.

Indeed, in our report last year on fixed-mobile convergence and quad-play strategies, Natasha Rybak, principal analyst at Current Analysis, noted that quad-play or multi-play is not a universal prescription for customer satisfaction. She said there was room for specialist mobile operators to address the needs of some customer segments.

Now, a new report from Ampere Analysis has also honed in on the pros and cons of bundling mobile services with existing triple-play packages This is now a highly topical issue given the recent increase in activities here by the likes of BT and Deutsche Telekom, not to mention other operators including TalkTalk, Sky and Liberty Global that want to add mobile to the mix in order to drive customer take-up and improve customer "stickiness".

In its report, Ampere said the facts are clear: bundling is a key revenue driver, with one additional product per customer adding an average $30 (€27.05) to the monthly revenue per unique subscriber. It is also a powerful competitive tool: Ampere said its research reveals that companies that bundle most have the highest market share and revenues per subscriber.

"In Europe, a service provider that has upsold just one additional product to its customer base typically has between 5 and 14 percentage points extra in market share," the company said.

However, Ampere has also noted that the market for triple-play bundling is slowing down and said that there is a downside to adding more products to a bundle: each extra product added is worth less than its standalone equivalent. In Western Europe this is $6 less per product per customer every month, the company said.

It has therefore urged caution when it comes to adding mobile to a fixed bundle, particularly for incumbent operators that have a strong position in both service types. If the lure of quad-play proves too great, it advises that operators should resist the temptation to compete on price, and instead "focus on feature and content-led product sets will be crucial to retaining value."--Anne

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