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A Whole Bundle of Trouble - The Problem With Bundled Service Packages

23/03/2015 15:51 GMT | Updated 19/05/2015 10:59 BST

So you want to buy a bundle of services? No? Why not? It must be a good deal because everyone's bundling these days. Amazon does it. So does Sky TV. And your broadband provider, your bank, your credit card and insurance companies, even fast food restaurants bundle services because they know what's best for you. You trust them not to charge you for stuff you don't want or need, don't you?

Sounds ridiculous doesn't it. But the big corporates have spent the last decade or so making sure that we now can't buy any core service without thinking: I wonder what else you get with that? Their tactics have been so effective that we now expect free stuff bundled in with every basic service.

Take your bank account. It probably includes a large number of wildly unrelated services: free travel insurance, legal advice, EU breakdown cover, mobile phone insurance, and one year's free membership to the National Trust, at the very least. The problem is, this stuff isn't free - the cost is hidden. And while you might use the travel insurance once, you probably won't use the other stuff - ever.

The same goes for telecoms, especially broadband packages. While there are straightforward deals out there, the majority come packaged together with lots of unnecessary add-on services and 'features' such as movie packages, a mobile SIM, and access to 250 TV channels, most of which you're never going to watch.

In telecoms, last year's buzz words were 'triple play' - internet, voice and TV bundled together into one package- and this year it's 'quad play', adding mobile into the mix. But as ever, the big telecoms megaliths are behind the curve. While they're getting excited about more bundling, designing ever-larger packages to entice new users, their customers are exhausted of being tied into deals which include services they don't like or use.

There's a new and growing dissatisfaction with the service providers' inflexible approach. Customers are going back to basics, down-shifting away from packages that include everything. Let's call this the Amazon Prime effect. Rather than welcoming a whole raft of services stuck together, people are returning to a simpler, more personal way of choosing services. They want a bare-bones internet subscription onto which they can add a video-on-demand service and a separate phone package that suits their own personal needs. They want to shop round for the best individual deal for each service. Because, deep down, people don't like being told what they need. Who knew?

This shift, which started in the US, is just about to start causing massive problems for the big telecoms players in the UK. Over the last five years, service providers have got increasingly fixated by full-fat product offerings and rather neglected the real needs of consumers. They've been pigeon-holing people using demographics and patronising them for so long that they've failed to hear the growing clamour of people screaming: 'No, I don't want 250 TV channels, just give me a connection to the internet'.

It's not difficult to understand. People don't necessarily want TV bundled up with their internet subscription because they can subscribe to affordable, high-quality video-on-demand services like Netflix at the push of a few buttons. All they need is a smart TV and an internet connection. And even if they don't have, or want, a smart TV they can use a set-top box or increasingly watch Netflix on their computer, tablet or mobile phone.

Buying a bundle of services was once seen as the best way for consumers to save money. But customers have changed. They're tech-smart and time-poor. They want services that suit their changing lifestyles. And that's why the providers that offer genuine choice and flexibility in the telecoms market, rather than lazy pre-packaged bundles, are going to succeed in the future.