Drivers of Demand Growth for Mobile Telecommunications Services: Evidence from International Panel Data
1 December 2004
By Dr. Agustin Ros and former NERA Vice President Dr. Aniruddha Banerjee
Mobile telecommunications services have experienced spectacular demand growth worldwide, particularly in the last decade. In the period between 1990 and 2001, the International Telecommunications Union estimates that the number of mobile subscribers worldwide grew from 11 million to 1.15 billion, which represents a compounded annual growth rate of almost 47 percent. Forecasters predict that global mobile services demand growth will remain robust and the number of mobile subscribers will soon surpass the number of fixed main lines worldwide.
Using panel data from 1996 to 2000, NERA Vice President Dr. Agustin Ros and former Vice President Dr. Aniruddha Banerjee investigated the drivers of mobile services demand growth in a selected panel of developed and developing countries. In this paper, they report the results from an econometric analysis of alternative measures of mobile telephony growth as a function of various market and regulatory variables and unobservable country and region-specific factors.
The authors find that technological, rather than economic, complementarity or substitution has been the more powerful underlying source of movement in mobile telephony markets. While pricing structure innovations like Calling Party Pays and prepaid service appear also to have contributed, usage prices themselves have not mattered much.
This paper was presented in August 2002 at the International Telecommunication Society 14th Biennial Conference in Seoul, South Korea and recently published as a chapter in the book,
Global Economy and Digital Society.
Copyright 2004 Elsevier. All rights reserved.
