Demand side economies of scope in bundled communication services

Abstract

Purpose

The purpose of this paper is to discuss the concept of demand side economies of scope in relation to multiplay services. The basic question raised in the paper is the extent to which demand side economies of scope in the area of multiplay is based on an externality founded in a positive feedback mechanism as in the case of demand side economies of scale in interactive communication networks.

Design/methodology/approach

In order to elucidate this, the paper first presents and explores the concept of economies of scope, and more specifically demand side economies of scope. Second, an analysis of the bundling strategies of operators in the field is presented, including an examination of the forms of bundling with respect to how open or close the business models implemented are. After this analysis, the paper concludes with a discussion of the demand side economies of scope concept aiming to contribute to a qualification of the concept and its applicability.

Findings

The paper concludes that the value proposition of multiplay services is more related to the intrinsic value of the service than its extrinsic value. This constitutes a major difference between demand side economies of scale and demand side economies of scope.

Practical implications

The findings of the paper have practical implications for operators offering multiplay services with respect to the drivers of this market.

Originality/value

The value of the paper lies in its discussion of the concept of demand side economies of scope.

Citation

Henten, A. and Godoe, H. (2010), "Demand side economies of scope in bundled communication services", info, Vol. 12 No. 1, pp. 26-38. https://doi.org/10.1108/14636691011015367