Why does bundled product in telecommunication service market matter? : Evidence from South Korea

Abstract

Due to network effects and market power with bundled product of telecommunication service market, service providers have to differentiate their product group in the competitive market. We explore that installed base(i.e., customer network), and a relationship between single and bundled products do affect corporate performance as well as a dominant transition of bundling market. We empirically describe these issues with data of which each net growth of single and multiple products(=bundled) was gathered by real industry of South Korea where there is overheated competition on their oligopoly market. We found strong evidences that through network effects, not only installed base was significantly associated with corporate finance such as total sales, total assets, and EBITDA, but also the difference between product types and size of installed base in single and multiple products was significant in a competitive market. As a result, our evidence provides an important explanation with operating firms currently. Furthermore, it was clear that using resource-based and market power view specifically vindicated the influences as we hypothesized.