Is Faster Necessarily Better? Third Generation (3G) Take-up Rates and the Implications for Next Generation Services

16 July 2010
By Christian Dippon

In this paper, NERA Vice President Christian Dippon examines the widely-held belief that faster is better when it comes to mobile telephony. Most countries around the world have allocated 3G spectrum and are eagerly moving forward to allocate advanced wireless services and 4G spectrum, both of which promise subscribers broadband Internet access with faster download speeds. Mobile operators anticipate that subscribers will adopt these services swiftly, thereby justifying the large investments operators must pay to be at the forefront of these developments. However, only two countries -- Japan and South Korea -- currently have more 3G than 2G subscribers. Furthermore, leading nations such as the US, the UK, and Germany have 3G penetration rates of less than 30 percent.

It is hypothesized that mobile subscribers do not view 3G services as being sufficiently different from 2G services and that regulators and operators have limited influence on adoption rates. Also, a country's socioeconomic attributes as well as the time that has passed since 3G services have been launched might have an impact on the pace at which 3G technology is adopted by end users. This paper facilitates the testing of these and other hypotheses by examining the determinants of 3G penetration rates and the effectiveness of various policy tools and derive several econometric models based on the 3G diffusion patterns and other attributes of 47 countries.