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Summary

At the Broadband World Forum Asia conference in Hong Kong next week, Ovum will be chairing the opening keynotes, and the very first session will feature HKBN's CEO, William Yeung, talking about the "Proven Business Model of Fiber Broadband & OTT Bundle." On this occasion, we took a dive into Ovum survey data on fixed broadband and multiplay bundling and noted that consumers in different countries and in different demographics can view the bundling proposition quite differently. Service providers need to be aware of these differences and tailor their bundling strategies accordingly.

Service providers need to be aware of differences in value proposition among consumers

Ovum's Digital Consumer Insights 2017: Multiplay sampled 6,000 consumers in 4Q16 across six markets – Australia, Brazil, China, France, the UK, and the US. We found that almost half of the survey respondents are considering changing their service bundle, their service provider, or both in the next 12 months. This type of churn can be very costly. The service bundle remains a key way to minimize churn, and we find that the bundle is evolving from the traditional dual-, triple-, and quad-play lineup to include new items such as an own or third-party OTT video service, music, security, and connected home services.

Our survey results threw up some interesting differences between China and Australia, the two Asia-Pacific nations in the survey. Among our survey respondents in China, the bundling stakes appear to be higher, with the proportion of respondents who bundled and who were considering a change (in the bundle or service provider) being higher than in Australia. But significant proportions in both countries were not yet bundling – opting to subscribe to fixed broadband and other services from separate providers. So what was the most important factor that would persuade the nonbundlers to sign up for a bundle?

In Australia, by far the most important factor was a discount on the price of the individual services (45% of respondents), but in China a discount was the most important factor for only 18% of nonbundlers. Much more important was the convenience of a single bill (28%). Digging deeper, we find that younger folks are setting the trend. Consumers <35 years of age value convenience even higher than the general population in China does, yet the same demographic in Australia values a price discount even higher than the general population does.

Clearly, attitudes toward bundling are very local and differ from country to country and among different demographic groups. Different value propositions in target audiences call for different bundling strategies. A lower need to offer a price discount can give operators much more flexibility to offer a wide range of own and third-party services in a single bundle, yet the need to offer a single bill that includes multiple must-have third-party services can be challenging to implement.

We are advising service providers in Asia-Pacific to consider new multiplay packages anchored by mobile telephony/mobile broadband if possible as these services become increasingly central to consumers' mobile and digital lifestyle. We are also advising them to consider offering their own OTT content services and/or "skinny bundles" of a smaller selection of pay-TV channels. Innovation in bundling will be crucial, especially given the ever-increasing cost of traditional premium content rights. Ovum will also be participating in a panel and speaking about operator FTTP strategies at Broadband World Forum Asia.

Appendix

Further reading

"Regulators are increasingly probing bundles," TE0007-001119 (January 2017)

Next-Generation Bundles Tracker: 2H16, TE0009-001593 (January 2017)

Pricing Innovation Case Study: Verizon's "Skinny Bundles," TE0009-001534 (August 2016)

Author

Kamalini Ganguly, Senior Analyst, Broadband and Multiplay

kamalini.ganguly@ovum.com

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