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Are users paying too much for broadband/TV bundling?

Posted By TelecomTV One , 28 January 2013 | 1 Comments | (1)
Tags: Broadband cable tv bundling

An interesting piece of (admittedly partial) research shows that consumers might be judged to be getting a bad deal out of broadband/TV bundles (or that marketeers are doing a brilliant job of selling them). Take your pick. By I.D. Scales

It's a piece of UK research but there's no reason to think it doesn't apply more generally. The UK Post Office (which sells budget broadband) and  Freeview (which provides terrestrial digital "free to air" television in the UK) surveyed the usage customers made of bundled TV, phone and broadband services.

 
The survey found that most consumers (especially the more elderly ones) were spending way more on the bundle than they got back in specific services and capabilities. In particular, while they were paying for hundreds of channels, most television users actually spent up to 75 per cent of their viewing time watching 'free to air' which they didn't have to pay extra for. 
 
The report revealed that the average monthly spend on bundles is £49, with almost half of this (£22) being spent on paying for extra TV channels. The simple calculation therefore is that £ 2.7 billion is being wasted on unwatched pay-TV channels. 
 
It might be possible to argue, of course, that the subjective value of the 25 per cent of that extra pay TV viewing is high enough - being sports or specialist TV - to make the extra outlay worthwhile, which is why people buy it. Perhaps. Or maybe they haven't thought it through.
 
It's a similar story at the broadband end of the package.
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Consumers have been taught that faster is better so, the report claims, consumers are usually signed up to too much speed. As 77 per cent of those surveyed reported that they mainly use their connection for surfing the web, emailing and social networking, the survey concludes that the 29Mbit/s average download speed enjoyed is way beyond what is required. 
 
Again, that assumes that customers don't place high value on the ability to have the service go fast when they need it (when downloading the occasional video, for instance). After all, drivers have always bought cars that can go over 100 miles per hour without feeling ripped off because they spend 99 per cent of their time well under the speed limit.
 
However, the thrust of the report is undoubtedly valid. If consumers are minded to grind the most value they can out of their connectivity they might start unbundling to get the optimum deals for their needs. Free to air' supplemented by some sort of video-on-demand arrangement would probably work out more cost effective than a big bundle TV deal for many viewers. And slower broadband speeds and even lower data allowances might be worth it too. 
 
The survey also showed that the more elderly the user, the less economical the bundled deal: the average elderly UK user (over 65) pays £51 per month on a bundle to watch just one hour of paid TV per day! Those users also use the least amount of data on their broadband. 

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(1) 28 January 2013 16:14:45 by Francis McInerney

Ian, I remember doing an analysis nearly two decades ago that ran something like this: if you can get X MB/mo for $Y, what is 8kHz voice worth. The answer came out, if memory serves, to 3¢ a month. The new Facebook app for iPhone is priced right!!

The same thing is happening today in video. Why pay when you don't have to. Especially when the sports feeds are killing the distributors and forcing them to drive up prices. Might was well cut the cord and move elsewhere to get only what you want only when you want it and at the price you'll pay.