The Effect of Competition on the Price and Quality of Triple-Play Bundles: Evidence on the Brazilian Telecommunications Market Tainá Leandroa,c Victor Gomesb December, 08, 2019 Declarations of interest: ‘none’ _______________________________ a University of Brasília, Brazil. c National Regulatory Agency for Private Health Insurance and Plans (ANS), Rio de Janeiro, Brazil. Rua Augusto Severo, 84, Glória, Rio de Janeiro – RJ. CEP: 20021-040. Corresponding author. E-mail:
[email protected]. b University of Brasília, Brasília, Brazil, Campus Universitário Darcy Ribeiro, Caixa Postal 04587, Brasília, DF. ABSTRACT: This empirical study seeks to estimate the effect of competition on the price and quality of triple-play bundles, by applying the difference-in-differences empirical model to data on the three largest telecommunications groups in Brazil. Results show competition promoted reduction in prices, up to 7.7%. Only one group reacted to competition by increasing the price of its services. However, at the same time, it improved the quality of pay TV and broadband services bundled in its triple-play offers. We also show that a tax exemption implemented during the period led to a 15% reduction in prices of one of the assessed groups. Keywords: Competition, telecommunications, broadband, triple play, quality JEL classification: L15, L52, L86 1. Introduction In Brazil, bundles of broadband, pay TV, and landline call services, known as Triple Play, have been increasingly adopted by service providers – in 2016, the service was available in 63% of cities. This commercial strategy has ambiguous effects on the telecommunications market, as such services may provide consumers with benefits or lead to less competition in wholesale and retail markets (Burnett, 2014; BEREC, 2010).