In 2017, we found bundling (with fixed broadband) under threat in many countries. Consumers were dropping traditional bundles with fixed voice and pay TV, preferring to take broadband-only services, or in some cases newer types of bundles with OTT and mobile, although take rates were still quite low. As a result, "unbundlers" – also known as broadband-only or naked broadband customers – were rising as a proportion of consumers with fixed broadband.
As we refresh our bundling forecasts in 2018, we find that the situation is changing. With a view toward reducing churn, service providers have refreshed their bundling and pricing strategies, and correspondingly bundling penetration rates are once again on the rise in some countries. The newer bundle combinations, and the strategy of reserving the best prices and broadband speeds for bundling customers, are having a positive impact.
But what happens when faster 5G mobile speeds become available in 2019 or 2020? The initial assumption would be that bundlers will stay loyal but that broadband-only customers, with the high speed rates that 5G promises, may be tempted to move to a mobile-only solution. After all, it's a lot easier to cut the cord when you subscribe to only one service. But service providers should not take bundlers for granted.
According to our consumer survey, and counter to what you might expect, bundlers are in fact more open to cutting the cord than unbundlers. In response to the survey question "would you ever drop fixed broadband for internet access on your mobile devices only?" 25% of unbundlers and 33% of bundlers said they would possibly do so if data was cheap enough or the mobile speed was good enough. To be clear, the majority of respondents (except in China) intended to keep their fixed broadband connection. But among those open to the idea of becoming a "mobile only" broadband consumer, this pattern of bundlers being more open to it was surprisingly consistent across the six countries we surveyed (Figure 1).
Figure 1: More bundlers are open to mobile-only internet access
Source: Ovum's 2018 Digital Consumer Insights survey
Bundlers (with higher spending than broadband only) may be more price sensitive, and hence willing to consider that a mobile bundle may be cheaper. 4G-enabled quality of mobile service and higher data allowances are already convincing for some, and 5G speeds may prove to be a tipping point for them. Also, consumers are now being offered OTT TV and music bundles along with mobile services but with or without fixed broadband. So, it may seem like a natural transition to take a mobile bundle – until they have trouble watching TV on a 55-inch screen.
If CSPs want to retain their fixed broadband customers in the age of 5G, they can't take their bundled customers for granted. They will need to keep refreshing their bundles, content, and customer experience, and to add mobile services in the bundle if possible. Also, as service providers work toward "zero-touch" service delivery, SDN/NFV-enabled quick-service changes, and Netflix-style no-contract services, changing services or providers will become increasingly "frictionless." All of this is good for the consumer, but not so much for the service provider in terms of churn. We will be digging deeper into the tipping point for the mobile-only transition with our newest survey and our bundling forecasts and reports – all to be published in December 2018.
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