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Does Service Bundling Reduce Churn?
Author(s) -
Prince Jeffrey,
Greenstein Shane
Publication year - 2014
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12073
Subject(s) - broadband , triple play (telecommunications) , matching (statistics) , service (business) , panel data , construct (python library) , business , telecommunications , computer science , marketing , econometrics , computer network , economics , statistics , mathematics
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.