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Tariff structures and access substitution of mobile cellular for fixed line in South Africa

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  • Hodge, James
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    Abstract

    The phenomenal growth of mobile cellular relative to fixed line phone ownership in Africa has been attributed to a wide range of factors, including institutional factors (such as competition and private foreign ownership), ease of access (low waiting times and no credit history for prepaid access) and of course the mobility. What has not received any attention is how the tariff structures in mobile have influenced consumer preferences. This paper examines how the difference in tariff structures between fixed line and mobile have accounted for the relative popularity of cellular in South Africa. It finds that the balance between fixed monthly and usage fees makes mobile both affordable and cheaper than fixed line for the bottom 50-60% of households that spend relatively little on communication. This is reflected in household behaviour where lower-income households treat cellular as a substitute for fixed line (owning only one or the other), while higher-income households treat the two as complements (owning both).

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    Bibliographic Info

    Article provided by Elsevier in its journal Telecommunications Policy.

    Volume (Year): 29 (2005)
    Issue (Month): 7 (August)
    Pages: 493-505

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    Handle: RePEc:eee:telpol:v:29:y:2005:i:7:p:493-505

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    Keywords: Cellular Tariff Telecommunications South Africa;

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    Cited by:
    1. Vogelsang, Ingo, 2010. "The relationship between mobile and fixed-line communications: A survey," Information Economics and Policy, Elsevier, vol. 22(1), pages 4-17, March.
    2. Peters, Kay & Albers, Sönke & Kumar, V., 2008. "Is there more to international Diffusion than Culture? An investigation on the Role of Marketing and Industry Variables," EconStor Preprints 27678, ZBW - German National Library of Economics.

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