Fixed-to-mobile substitution in the European Union |
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Authors: | Lukasz Grzybowski |
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Institution: | 1. Telecom ParisTech, Department of Economics and Social Sciences, 46 rue Barrault, 75013 Paris, France;2. School of Economics, Faculty of Commerce, University of Cape Town, Private Bag, Rondebosch 7701, Cape Town, South Africa |
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Abstract: | This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union using cross-section panel data on households’ choices of telecommunications technologies in years 2005–2010. We estimate a structural model of household?s demand for access to: (i) fixed-line only; (ii) mobile only; and (iii) both fixed-line and mobile. We find that growing Internet usage increases the share of ‘fixed + mobile’ households, which suggests that households keep their fixed-line connection to access Internet. However, the spread of 3G and cable broadband access decreases the share of ‘fixed + mobile’ households and increases the share of ‘mobile only’ households. Hence, fixed-to-mobile substitution was slowed down by the spread of Internet but it may continue with the spread of mobile broadband. Furthermore, bundling of telecommunications services increases the share of ‘fixed + mobile’ households and decreases the shares of ‘mobile only’ and ‘fixed only’ households. Therefore, operators which can bundle fixed-line connection with Internet or mobile services may slow down fixed-to-mobile substitution. |
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Keywords: | Fixed-to-mobile substitution Internet Mobile broadband Bundling |
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