This paper analyzes the incentive for service bundling of entrant and its effect on the incumbent with bottleneck facilities in the broadband Internet service market using traditional Hotelling model. In addition, I discuss how the social welfare maximizing access charge is determined. Two cases are considered : (ⅰ) the case that the market is covered (ⅱ) the case that the market is not covered. In the first, when the market is covered, entrant has the incentive for service bundling provided that there is sufficient service differentiation. This entrant’s bundling strategy reduces incumbent’s profit. The size of social welfare is independent on the access charge and access charge has an only effect on redistributing net surplus between consumers and incumbent. In the second, when the market is not covered, the result differs from the case that the market is covered. In this case, entrant has the incentive for service bundling under low access charge. Against the former results, incumbent’s profit increases provided that access charge is more than unit cost of providing access. The size of social welfare is dependent on the access charge and welfare maximizing access charge is less than unit cost of providing access.
