Contrasting Effects of Expenditure and Contract Design in Bundled Telecommunication Services

This study examines the contrasting effects of expenditure and contract design on consumer choice and welfare in the bundled telecommunications market. A choice-based conjoint (CBC) experiment incorporating technical attributes, pricing factors, and contractual terms was conducted, and a mixed logit model was employed to estimate individual-level heterogeneous preferences. The results show that consumers are generally more sensitive to changes in expenditure than to contractual adjustments, with the ratio of contract-related utility to expenditure utility (ETF-to-price ratio) having a median value of approximately -0.11. Scenario analysis revealed that modifying certain elements of contract design significantly alters consumer surplus. Specifically, increasing the contractual floor from the baseline reduced consumer surplus by -0.056 and -0.223, while lowering the ceiling increased it by 0.361 and 0.902, respectively. These findings suggest that sustained reductions in expenditure may be more effective for customer acquisition and retention, while moderate contractual conditions can also contribute to customer base stability. Policy implications include proportional regulation of contract terms, greater transparency in calculation methods, and real-time disclosure of termination conditions to enhance consumer welfare and promote market competition.