Link between termination rates and retail prices in Namibia,Kenya and South Africa

This paper analyses the link between mobile termination rate reductions and retail prices. It draws on in-depth case studies of South Africa, Namibia and Kenya where regulators have reduced termination rates towards the cost of an efficient operator. To varying degrees these have all led to lower retail prices and significant market expansion. While retail prices in both Namibia and Kenya dropped following substantial termination rate reductions, the South African case demonstrates that termination rate reductions are not always passed on to consumers as is hoped by such regulatory interventions. In South Africa, it was only after the second reduction in March 2012 that smaller operators were able to reduce their off-net prices to a level that could tempt the subscribers to dominant operators to switch. All the case studies confirm nevertheless that retail prices do not go up in response to termination rates going down as contended by dominant mobile operators around the world. This is in contrast to a body of literature stating that termination rates and mobile retail prices constitute a two-sided market and that termination rate reductions will lead to a so-called “waterbed effect”.     

Optimal mobile termination rate: The Brazilian mobile market case

This paper presents a study of the impacts of changes in the mobile termination rate in Brazil using 2008 as the base year. For this we use an extension of the monopolistic competition model used by Wright, Thompson, and Renard (2007) allowing for the charge of interconnection fee also from calls originating on mobile networks and differentiated prices for on-net and off-net calls. After calibration of the model parameters and estimation of the price elasticity of demand for mobile services, we conduct a comparative static analysis varying the mobile termination rate in order to find the optimal value for that parameter. Finally, we provide some discussions on policy regulation in that sector depending on the objective of the regulator agency.     

Diffusion of mobile telephony: An empirical study in Taiwan

Mobile telephony penetration is a major indicator of mobile telephony diffusion. Taiwan had a mobile telephony penetration of 108% in 2002, ranking first in the world. This study analyzes this accelerated diffusion in terms of growth model and determinants of the diffusion rate. To eliminate the inherent uncertainty associated with choosing the optimal growth model, this study compares the performance of three conventional models, namely Gompertz, Logistic and Bass, to identify the most appropriate model, and to distinguish the forces driving the diffusion rate. Empirical results indicate that the most appropriate model is the Logistic model. Network externalities, which this study shows to be the same as the imitation effect in the Bass model, explain the superiority of the Logistic model. Moreover, market competition, which markedly reduces service prices, is identified as a primary driver of the diffusion rate of mobile telephony in Taiwan. Economic conditions, technological innovation and number of operators are insignificant factors. Finally, mobile telephony is a substitute for fixed-line telephony in Taiwan.     

The impact of regulation on the retail prices in fixed-line telephony across the European Union

This paper estimates reduced-form models for incumbent prices in the fixed telecommunications industry using data for European Union (EU) countries from 1998 to 2002. The regulation of fixed-line telephony has a significant impact on prices for residential consumers. Liberalization of the telecommunications industry decreased retail prices by about 8.2%. The introduction of carrier pre-selection and number portability had a negative impact on price levels. The estimation results also suggest that a 1% decrease in termination charges on the incumbent network led on average to a 0.17% decrease in the cost of usage basket for residential consumers. Furthermore, in the pricing regressions for incumbent local and national calls at peak and off-peak times interconnection charges are significant only in the estimation of national peak prices. A 1% decrease in single transit interconnection charges on the incumbent network led to a 0.31% decrease in incumbent national prices at peak times, as calculated for the average prices in the EU in 2002.     

Convergence and diversification in cable industry: An empirical analysis of the deployment pattern of cable telephony in US local telecommunications markets

The primary purpose of this study is to examine the deployment pattern of cable telephony in the US local telecommunications market. A model is established stressing that the size of local markets and the specific cost advantages of local cable systems are associated with the deployment of cable telephony by cable operators.     

Diffusion of mobile telephony: Analysis of determinants in Cameroon

This paper explores the diffusion of mobile telephone technology in Cameroon by identifying and analyzing the determinants of this diffusion. Studying the diffusion of mobile communications in African countries by integrating them into panels of developing countries is problematic. This approach is likely to mask the intrinsic differences as concerns the diffusion process. This survey shows, through the estimation of an S-shaped growth curve, that the Logistic model best describes the diffusion of mobile phone technology in Cameroon. Income, openness to competition and the use of SMS are key forces driving this diffusion. Forecasts indicate an increase of almost 70% in the demand by 2026 as far as mobile phone use in Cameroon is concerned. This implies not only an improvement in operators' and State's revenues, but also, the need to invest in infrastructures. Our recommendation therefore calls for a greater liberalization of the mobile phone market in Cameroon. In addition, given the complementary relationship between the core and the mobile networks, infrastructural investments are also needed in both sectors.     

The welfare effects of mobile termination rate regulation in asymmetric oligopolies: The case of Spain

This paper examines the effects of mobile termination rate regulation in asymmetric oligopolies. It extends existing models of asymmetric duopoly and symmetric oligopoly where consumer expectations about market shares are passive. First, demand and product differentiation parameters are calibrated using detailed data from the Spanish market from 2010. Next, equilibrium outcomes and welfare effects under alternative scenarios of future termination rates are predicted. Lowering termination rates typically lowers profits of all networks and improves consumer and total surplus.     

Competition in Turkish mobile telecommunications markets: Price elasticities and network substitution

This paper estimates demand elasticities for Turkish mobile telecommunications markets. In contrast to most other studies, firm-level data is used to estimate dynamic panel data models including instrumental variable techniques. Both short- and long-run elasticities are calculated, yielding a long-run price elasticity of −0.72 for the post-paid market and of −0.33 for the pre-paid market. The short-run price elasticity is estimated to be −0.36 for the post-paid market and −0.20 for the pre-paid market. In addition, there is evidence of fixed-to-mobile traffic substitution for consumers who use pre-paid cards.     

Network effects in mobile telecommunications markets: A comparative analysis of consumers' preferences in five Latin American countries

It has been shown that the presence of demand-side externalities can induce the market to benefit the largest firms in terms of market share, usually named as network effect by the theoretical literature. On the one hand, macro-level approach in the empirical literature of network effects commonly use the assumption that a network's overall size matters more to consumers' decisions (global network effects). On the other hand, micro-level studies have suggested that social networks are more relevant to consumers' choices than the overall network size (local network effects). Based on microdata from five Latin American countries, we compare the choice of a particular operator over choosing the largest operator by individual consumers. Our research shows that country-level network size is one among a set factors that determine consumers' choices of mobile operators, once individual and operators' country presence heterogeneity are considered. We find that consumers' local network decisions are important for the choice of operator in the majority of cases considered, and that this result is conditional on the chosen operator's market share. Furthermore, network characteristics and consumer preferences, such as coverage, tariffs, and network importance also affect the choice of mobile network for the Latin American context.     

Termination notice of mobile network operator customers after a tariff switch: An empirical study of postpaid subscribers in Germany

Proactive subscriber churn management strategies of mobile network operators (MNOs) require that steps are taken to keep customers before they hand over a formal notice of termination to their provider. Therefore, several studies have analyzed how MNO customers who gave a termination announcement differ from individuals who did not communicate this message. However, no work has examined such differences among subscribers who recently switched to another tariff of their MNO. Therefore, this paper explores socio-demographic, service consumption and tariff change differences between contract cancellation “announcers” and “non-announcers” in a sample of 1810 postpaid customers who had changed their rate plan not long ago. Cancellation announcers were more likely to be males who decreased their mobile voice consumption after their tariff switch, had already attempted to churn in the past, had moved from an unmetered to a metered rate type, paid higher monthly bill amounts and received no discounts on their current rate plan that was introduced on the market some time ago. Among subscribers who gave a termination notice, early (late) cancellation announcers were more likely to be older (younger) customers with a growing (shrinking) SMS consumption after their tariff switch, had not attempted (had already tried) to leave their current MNO in the past, and were in a rate plan that was (not) recently introduced. The findings contribute to the literature on mobile customer retention and have implications for practitioners and scholars.     

The effects of lower mobile termination rates in South Africa

The effects of a 90% reduction in mobile termination rates (MTRs) are evaluated over the period between 2009 and 2017 in South Africa. Prepaid prices and quality-adjusted postpaid prices declined by over 40%. However, only approximately 30% of the decline in prepaid prices and 60% of the reduction in quality-adjusted postpaid prices can be explained by lower MTR costs. On-net and off-net prepaid prices converged as MTR costs dropped. Regulators concerned about high retail prices and differences between on-net and off-net prices should reduce MTRs.     

Lopsided effects of telecom reforms on mobile markets in the enlarged EU: Evidence from dynamic quantile model

The European Union (EU) has recently been significantly enlarged with addition of ten countries, almost all from Central and Eastern Europe (CEE). This was expected to enhance the performance of the mobile telecommunications industry in the accession countries and in turn to consolidate the highly fragmented European mobile telecoms market to finally reach the single market goal. However, the significant differences between mobile telecommunication performances from one country to another in the enlarged European area raise the issue of how optimal and durable the EU-level reforms have been. We use dynamic quantile regression methods to estimate the effects of mobile telecommunication reforms on the providers' performance in the EU enlargement context. This approach allows uncovering potential asymmetric effects of telecom reforms policy by letting the parameters of regressions vary across the conditional distribution of the sector's performance indicators. Using annual data from on 32 European countries from 1993 to 2011, we document asymmetrical responses to the reforms depending on the conditioning quantile at which they are calculated. Our results show that the effects of the generic and imposed European reforms are notably beneficial and larger for players in developed European countries characterized initially by real and higher degree of the reforms implementation. Accordingly, the success and durability of European reforms, especially in the new CEE member states, which often fail to comply with the pace of the reforms' adoption of industrialized European countries, is not guaranteed when countries specifications are not sufficiently taken into account. A final appealing result regarding the regress of the reform-performance relationship in the mobile markets after enlargement even for western countries attract attention on revising the Europe's current approach to telecoms regulation.     

The role of mobile handsets in advanced network service evolution: Evidence from Japan

This paper aims at a better understanding of the mechanisms of mobile network service evolution through a closer examination of the context of mobile handsets. It aims first to establish quantitatively that mobile handsets are a determinant of mobile network service evolution patterns, and second, to develop a consistent perspective capable of explaining the evolution of various mobile network services. Despite the fact that mobile handsets are indispensable to users of mobile network services, surprisingly little is known about the role of these handsets in mobile network service evolution. This paper provides quantitative evidence of a positive relationship between intra-network-carrier penetration rates for mobile network service subscribers and mobile handsets designed for these services. The relationship is such that if one network service is diffused more than another, the mobile handsets related to the more diffused service are similarly more widely diffused in the market, and vice versa. The evidence is derived from an analysis of two mobile network services in Japan, mobile Internet and third generation mobile, initiated by NTT DoCoMo and KDDI. There are no existing studies that consistently explain the mechanisms of different mobile network service evolution patterns. Since the positive relationship that emerges from the analysis is consistent for both cases, by examining the mechanisms underlying this relationship, the paper develops an adequate and consistent perspective based on a constituent model reflecting the technological and competition structure of mobile network services. From this perspective, this positive relationship can be explained as the similarity or dissimilarity in essential technology ownership distribution across constituents. This perspective describes mobile network evolution in terms of changes in the distribution of essential technology ownership and, therefore, could be generalised more widely.     

Business ecosystem strategies of mobile network operators in the 3G era: The case of China Mobile

In order to define the mobile network operators' strategies of building value network in the 3G era, this paper applies the ecosystem principles to the mobile industry through a China Mobile case study. Based on an analytical framework of such principles, this paper reviews China Mobile's ecosystem, and identifies its success factors and problems. The results indicate that a complete ecosystem, where mobile network operators collaborate closely with value-added service providers, content/application providers, equipment and device manufacturers, and other involved organizations, can promote the development of mobile data services substantially. Therefore, mobile network operators should play a central role in the ecosystem by managing the entire value-chain and setting up proper value-sharing mechanisms. However, while doing so, problems may arise because of regulatory issues and information asymmetry. High-value common assets, a centralized management system, partner selection schemes and continuous innovations are important success factors.     

Demand for coffee in Sweden: The role of prices, preferences and market power

There is a widespread belief that consumer coffee prices are high relative to bean prices and that lower consumer prices would lead to substantial increases in bean exports from Third-World countries. This issue is evaluated by analysing how retail prices, preferences and market power influence coffee demand in Sweden. A demand function is estimated for the period 1968–2002 and used, together with information on import prices of coffee beans, to simulate an oligopoly model. This approach gives estimates of the maximum average degree of market power and shows how coffee demand would react to reductions in marginal cost to its minimum level. The maximum level of market power is found to be low, but it generates large spreads between consumer and bean prices because the price elasticity has low absolute values. Moreover, the impact of a price decrease would be small because long-run coffee demand is dominated by changes in the population structure in combination with different preferences across age groups. Hence, a change to perfect competition would only have a negligible effect on bean imports.     

The changing public role in services to food and agriculture : The legal regulation of food markets in India

A framework allowing the commercial transfer of property rights is an essential prerequisite to market exchange widely considered the prerogative of the state. Here, the social history of the legal regulation of agricultural markets in central, south and northeast India is examined. Regulatory law is shown to be riven with unanticipated outcomes, working as intended only under rare conditions of competition and absence of preharvest commercial debt. Meso level institutions of collective action and micro level behaviour by firms also regulate exchange, unsystematically according to their multiple objectives. Foreign funded projects and another layer of customary procedure. In the light of this analysis, the current policy debates over agricultural market reform are discussed and an analytical framework and suggestions for reform are offered.     

The mode of exchange and shaping of markets: Distributor influence in the Swedish post-war food industry

This paper addresses the associations between the mode of exchange and the configuration of market actors and exchange objects through a historical case study of the introduction of self-service retailing in the private food retail trade in Sweden. The changes in the mode of exchange reported in the case resulted from organizing efforts involving both retailers and a major wholesaler. These efforts were directed towards two main areas: the material framing of the exchange situation, e.g. the redesign of store facilities, interiors and the pre-packaging of goods, and the agency of the involved actors, e.g. information campaigns and education directed towards retailers and consumers. Through this process, a network of associations was forged that inter-defined the mode of exchange, the market actors and the exchange objects. The paper contributes to extant literature on the shaping of markets by empirically examining the associations constituting modes of exchange and the process through which these associations are forged. A central finding is that the introduction of self-service was elaborately intertwined with changes in the characteristics of the actors and objects of exchange.