2. What Is the Effect of Bundling in Telecom?

Bundling is a pricing and marketing strategy by firms that combine products or services together in order to sell them as a single combined unit for a special price. Bundling allows the convenient purchase of several related products and/or services from one firm. Bundling is a strategy used by wireline providers to combine their voice and broadband service offerings; by mobile operators to provide one-stop shopping for handsets and their mobile services; and by broadcasters to provide a bouquet of their channels. However, bundling may have anticompetitive and anticonsumer consequences such as firms’ leveraging their dominant position in one product to subvert competition in another product; engaging in predatory pricing; not being transparent in providing the information on bundles to consumers, to name a few. In this chapter, specific cases of bundling in the telecom domain are discussed. The difference between wholesale and retail bundling is described. The corresponding regulatory implications and possible interventions are detailed out. Specific questions that are addressed in this chapter are as follows: