Estimating demand for fixed-line telecommunication bundles

Abstract

In this study, a stated preference discrete choice experiment is applied to model subscription choices between standardized packages of fixed-line telecommunications services in a sample of individuals in Poland. We provide willingness-to-pay (WTP) estimates for telephony, broadband and pay TV offered as stand-alone services and dual or triple-play bundles. The main goal of the paper is to investigate substitutability and complementarity between various component services based on estimated valuations. Considerable preference heterogeneity towards fixed-line services is identified and explained by service profile and usage intensity.Broadband is the highest valued among fixed-line services. Fixed-line broadband and pay TV are super additive in valuations indicating complementarity. We obtain evidence of fixed to mobile substitution in voice and data, driven by unlimited mobile voice plans and data plans with higher transfer limit. On methodological grounds, choice-based WTP estimates are more adequate measure of consumer reservation prices for telecommunications services than self-reported valuations.