Summary
Bundled products account for over 90 % of the German telecommunications market. Hardly any ISP in Germany offers stand-alone services. As a result, most customers switch to bundled products. Although double-play customers still account for the largest share, the share of bundles with three or more services is increasing continuously. Many ISPs (Internet Service Providers) of bundled offers are vertically integrated and simultaneously active at several levels of the value chain. ISPs bundle not only fixed and mobile services (fixed-mobile bundles - FMBs), but also content (such as sports offerings via premium TV services).
One of the more recent bundling trends in Germany is the bundling of telecommunications services with premium content. In principle, all ISPs, whether nationwide or regional, are in a position to offer an additional service in the form of premium content. In order to offer premium content, ISPs usually enter into a vertical agreement with a content or program provider. ISPs rarely produce and market their own content in Germany.
The decisive factor for the competitive assessment of premium content is whether it can be offered exclusively by ISPs or not. In addition to exclusivity, however, further prerequisites are necessary for competitive effects to be negative. In principle, there are no restrictions on access to premium content in Germany. Another trend is fixed-network mobile telephony bundles (FMB). Users who have already concluded a fixed-network or mobile communications contract with an ISP can obtain discounts and exclusive offers by bundling both contracts. However, not all ISPs surveyed offer FMBs to their end customers. Some regional ISPs offer fixed and mobile services, but not in bundles at lower conditions. Depending on the package, FMB customers receive more data at lower prices. This allows mobile ISPs to penetrate price regions where there are smaller stand-alone mobile competitors. However, FMB's take-up rate in Germany is still very low compared to other countries, which is why it is not yet possible to make any statements about possible competitive effects of FMB.
In this study we examine the possible competitive effects of bundled products and their impact in practice. Our study concludes that it is still too early to make a final assessment of the competitive impact, partly due to the relatively short time it takes to observe the bundling trends in the market. There is therefore currently no need for regulatory action.
Diskussion Paper is available for download.
