For any online gamer or video streamer, there is a high importance placed on the speed and bandwidth of their internet services as it directly affects the quality of their game or video. As the popularity of bandwidth rises it is apparent that more and more consumers are cutting the cable cord and making the switch to wireless. According to AT&T reports (NYSE:$T), 390,000 linear video subscribers were lost in the third quarter. Similarly, Comcast (NASDAQ:$CMCSA) is anticipating to lose between 100,000 and 150,000 subscribers.

Despite the switch, consumers will continue to be reliant on services providers such as AT&T and Comcast, for broadband internet. On average, for service providers, triple-play bundles average approximately $32 in EBITDA, whereas for broadband-only service the average is approximately $80 per month.

Bundling

For providers, the ideal scenario is for them to convince consumers that bundling their services is still the route to go. They attract customers through reducing costs of the services. For example, currently, At&T has a promotion where subscribers can receive $25 off their TV services when bundled together with high-end unlimited wireless data plan.

Service providers are taking a risk of decreased profit margins when offering bundling promotions. However, they open themselves up to the possibility of receiving greater earnings in the long run, due to higher revenue and customer retention.

Unlike bundling, the profit margins of broadband-only prices are relatively low. Therefore, to compensate, service providers increase the price when selling broadband-only for the consumers. Ultimately, making the switch to broadband is expensive for all consumers, the cost is not the result of the increase of wireless user but rather the overall cost of the service.  Unfortunately, whether you choose to pay for a bundle package or choose a broadband-only option, service providers will be the ones who benefit, however that is the price consumers pay for faster internet services.

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