Alternatives to static product bundling: Usage based discounting & dynamic bundling

The emergence of the digital age has made the internet the de-facto backbone for providing digital services. The digital savvy consumers, with more power than ever in their handheld devices and innovative apps running on them, are leveraging the full power of the connected world to interact, collaborate and work in the global environment. These trends have changed the competitive landscape in the Telecom industry as services which were earlier a great source of revenue for Communication service providers (CSPs) like SMS, MMS, voice calls, etc. are now being cannibalized by “free of cost” app services like Whatsapp, Skype, Facebook, Twitter and many such social media apps. Additionally, factors like emergence of OTT players, cable providers getting stronger in traditional telecom service space and entry of other non-traditional service providers, are making the market extremely competitive and increasingly complex. The basic services are getting commoditized, impacting average revenue per user (ARPU) and profitability. The CSPs are under constant pressure to find new ways to increase the ARPU or at least keep it at the same level and retain customer base. Aggressive selling through bundles and promotions are few of the tools used by CSPs to improve their ARPU. This paper provides a point of view on the pros and cons of bundling and explores other options.