Service Bundling

Study Guide

Bundling of Internet, TV, and Telephone

Due partly to the increasing popularity of high-speed internet and cable television, and partly to the consolidation of telecom companies, we have started to see a new phenomenon of bundling cable television, telephone, and internet service in one bill. Consumers can benefit from significant savings over paying for each service separately, but are forced to use the services in the bundle to receive the discount. BellSouth currently has a bundle where you use BellSouth for long distance and local phone service, their Cingular wireless service for your cellular phone plan, and DirecTV for satellite TV service. 

  • Cable firms seen gaining subscribers Catherine McLean,
  • Cable firms evolve Felix Sanchez,
  • Should telecom companies be allowed to offer bundle packages? Especially if they own more than one of the services bundled?
  • Should regulation be put in place to prevent telecom companies from having control of too many types of services in one area?

Bundling of Content

With more and more internet users switching to the Internet as their primary news source, content providers have seized this as an opportunity to sell more advertising and sell "enhanced" content such as more detailed articles and video clips. There has also been an increase in the amount of customers using iTunes and other music services, which has led to bundle pricing on media, a more profitable alternative to disc media. Currently, news site offers a service called CNN(Pipeline), which allows users who pay a premium to view live news streams and exclusive video clips.

  • iTunes 'first' with NBC 'Scrubs' mac news network
  • Is it fair for content providers to create new content (possibly of better quality than the "free" content) for users who pay a premium?
  • Do content providers have any obligation to provide free news content, as opposed to charging for everything? Do you think this change would result in higher quality content?

Internet Portals and Search Engines

What is an internet portal? Internet portals, such as,,, etc. have become increasingly more popular, as they generate personalized start pages with news, advertisements, weather and more. These portals make money however, by their advertising, both by ads placed on the webpage, and by returning particular sites when doing internet searches. Several of the popular search engines and portals are discussed below, along with their standards of making money and product placement.

Telecom Giant Mergers

AT&T - BellSouth Merger

In recent weeks, SBC/at&t has announced its intent to merge with BellSouth, and combine the two companies' services under the umbrella of AT&T's brand name. The new company would control cable television, broadband and dialup internet, local and long distance phone service, and cellular phone service in several states. Company officials claim nothing but benefits for consumers, but many fear rate increases and job cuts.

  • Experts see smooth AT&T-BellSouth Merger Peter Svensson, BusinessWeek Online
  • Merger puts BellSouth back in business? David Mildenberg, Charlotte Business Journal
  • Do you think the merger would have more benefits or disadvantages for consumers, whether or not they're affected by the merger directly?
  • Would the merger simply undo the 1980's split up of the AT&T monopoly, or have they learned their lesson after all this time?

AOL - TimeWarner Merger

Internet Service Providers or ISPs are a big business in today's world. This is solely due to the need for people to access the internet and these ISPs are here to do just that. Recently one of the world's leading ISPs, AOL, merged with the cable television giant TimeWarner. Some feel this merger will allow the companies to "bundle" AOL software with broadband internet access that pre-existed with TimeWarner services such as Road Runner. People whom by the service through their local cable company may be forced to use AOL or AOL based software when accessing the internet.

  • What is ethically wrong with the AOL-TimeWarner merger?
  • Who else would suffer from this merger?

Journalism vs. Newsstand

In Rushworth M. Kidder's article, linked below, she asserts that in addition to being concerned about an AOL ISP monopoly-like conglomerate growing, we really need to be concerned about the ethics involved in the type of services this particular conglomerate provides. After all - AOL Time Warner now owns an ISP, a major high-volume internet portal that makes money from link placement, and a well known news provider, Time magazine, which has a reputation it needs to keep to survive, which does not include news based on monetary contribution. Read the articles below for some opinions on the media implications of this merger. Also below is a link to a list of the "best practices of digital media," as created by two major media publishing authorities.

Other ISPs & service issues

Service Bundling with Internet Service

The big concerns about the AOL Time Warner merger include the fact that it is now one of the biggest companies in the US, with a wide range of services, and an equally large client base, making it quite possible for it to use its new broadband assets to make AOL service the only feasible service for many people. Added to this concern is that AOL will use its even more popular program, AOL Instant Messenger for these purposes. This is not the first instance of concern though. Read below an interview with three experts on the AOL Time Warner merger, and some additional opinions about what might have been involved in the Time Warner Disney dispute and the AT&T TCI merger issues.

ISP contracts with Websites for better caching

One final hot topic deals with caching. ISPs and website owners can greatly benefit from one another if the ISP is allowed to cache the web site. This causes the website to upload faster for users under that ISP. By the two sides entering into a contract, competing websites such as and would load either slower or faster depending on who had the contract with the ISP you are using!

DSL benefiting the Phone Company ISPs

Another hardship for independent companies exists in the DSL market. Independent DSL providers can't compete with phone companies who have their own ISPs. These phone companies of course own the phone lines, thus giving them easier access to run and promote high-speed internet access with their ISPs. This also allows them to offer the service at a much lower rate. Finally there is the simple case of consolidation. Many people would rather do business with one company than two, three, or even four companies to handle their telecommunication needs.

  • Are phone companies acting ethically by using their own phone lines to offer DSL to customers at a cheap price?
  • How should this situation be handled? Should local or federal government step in?