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For now, there is sufficient competition in bundling telecom products

For now, there is sufficient competition on the telecom market, despite the trend of bundling telecom products in all-in-one packages. That has been the conclusion of the Netherlands Authority for Consumers and Markets (ACM) after its market study into the impact of all-in-one packages on the telecom market: fixed telephony, mobile telephony, broadband access, and television services. Providers also add exclusive content to packages, such as free movies, series, or sports broadcasts. This can be attractive to consumers. As of yet, this does not create any anticompetitive risks.

What was the problem?

ACM has seen that consumers increasingly opt for multiple telecom products in a single package. Such packages combine television services, broadband access, fixed telephony, and mobile telephony, or combinations thereof. By offering competitive deals, telecom providers are able to satisfy the need among consumers for ‘savings, simplicity, and convenience’. Initially, television services, broadband access and fixed telephony were bundled into packages. In recent years, mobile services have also been added. This has led to the rise of four-in-one packages. In addition, providers increasingly add exclusive channels, free movies, series or sports broadcasts to these packages. That is one of the ways to attract additional customers, because they are unable to get these shows from other providers. Think of HBO series that are only available from Ziggo. Or KPN that offers series via its own channel ‘KPN presenteert’ (‘KPN presents’).

What are the risks for consumers?

If consumers choose packages, they are less likely to switch. In part, this is because ‘separate’ plans combined are often more expensive or offer less than an all-in-one package. However, comparing various offers from other providers becomes increasingly difficult: voice minutes, download speed, TV plan, data plan. No two offers are exactly the same.

If providers add more and more exclusive content to plans, it can also restrict switching. Certain series or shows will then only be available from a single provider. Plans can also become more expensive because the costs for these additional shows are passed on to consumers.  

What are the risks for telecom providers?

Two major competitors operate both a fixed network and a mobile network: KPN and Vodafone/Ziggo. Other competitors with just a mobile network, such as Tele2 or T-Mobile, have to buy access from KPN in order to be able to offer their customers, too, a complete package of fixed telephony, mobile telephony, broadband access, and television services. They often have smaller customer bases, and are unable to spread their risks over such bases. This could have negative effects on smaller providers. The risk is that they will eventually disappear from the telecom market.

What will ACM do?

‘Online consumers’ is one of ACM’s main priorities. That is why ACM has conducted this study to identify the risks. For now, the benefits for consumers of bundling services seem to outweigh the drawbacks. ACM will continue to ensure that comparing plans does not become harder, and switching does not become unnecessarily complicated. ACM believes that sufficient options should continue to exist, and that more options should be available than just expensive TV plans.

For healthy competition, it is important that smaller telecom providers with competitive prices also exist. We are currently conducting another Telecommunication Market Analysis. It may result in measures that promote competition between larger and smaller telecom providers. The benefits that consumers enjoy of having more providers such as competitive prices, sufficient options, and additional services cannot go away because smaller telecom providers leave the market.

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