Telecom study: Price, not bundling, key

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TORONTO -- It turns out those telecom triple-play packages designed to attract and retain subscribers are not so "sticky" after all.

The Canadian arm of consulting firm KPMG on Tuesday released a report that concludes that bundled phone, TV and Internet services are ineffective in retaining subscribers because most phone users are readily prepared to switch to a rival provider with less expensive services.

The KPMG study said that a "significant number" of consumers indicated they would break their contract and choose another provider if they were offered a better price for one or more of the Internet, TV and telephone services.

"Canadian consumers, who spend a significant part of their day on multimedia devices, tend to be more price sensitive than loyal when it comes to bundled services," said Kathy Cunningham, industry sector leader for communications and media practice at KPMG LLP.

"The providers' assumption that bundling packages that offer the triple- or quadruple-play of services will be a strong retention factor is not as binding with consumers as a competitive price point," she added.

The KPMG study polled 4,400 consumers in 16 countries and found that 57% identified attractive pricing as the top factor when deciding which bundled service contract to sign.

Only 20% of phone users polled said that they would be unwilling to switch to a rival provider.

The study indicated consumers were most loyal when it comes to packages that involve video game services, with less than half of Canadian gamers indicating they would switch because of price.

Telecom subscribers were considerably less loyal when it came to other multimedia services like instant messaging, online blogging/networking, news access and shopping.
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