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

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  • Hodge, James

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).

Suggested Citation

  • Hodge, James, 2005. "Tariff structures and access substitution of mobile cellular for fixed line in South Africa," Telecommunications Policy, Elsevier, vol. 29(7), pages 493-505, August.
    • Handle: RePEc:eee:telpol:v:29:y:2005:i:7:p:493-505
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    Cited by:

    1. Gamboa, Luis Fernando & Gutiérrez, Luis H., 2010. "Public resale of mobile telephone minutes: An alternative access for low-income households in Colombia," Technology in Society, Elsevier, vol. 32(2), pages 122-129.
    2. Kere, Safilidin & Zongo, Amara, 2023. "Digital technologies and intra-African trade," International Economics, Elsevier, vol. 173(C), pages 359-383.
    3. Suárez, David & García-Mariñoso, Begoña, 2013. "Which are the drivers of fixed to mobile telephone access substitution? An empirical study of the Spanish residential market," Telecommunications Policy, Elsevier, vol. 37(4), pages 282-291.
    4. Nour, Samia, 2011. "The Use and Economic Impacts of Information and Communication Technology (ICT) in Sudan," MERIT Working Papers 2011-060, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Buys, Piet & Dasgupta, Susmita & Thomas, Timothy S. & Wheeler, David, 2009. "Determinants of a Digital Divide in Sub-Saharan Africa: A Spatial Econometric Analysis of Cell Phone Coverage," World Development, Elsevier, vol. 37(9), pages 1494-1505, September.
    6. Powell, Crystal, 2015. "‘Uphi?’1 ICTs and the mitigation of distance in a South African township," Technology in Society, Elsevier, vol. 42(C), pages 39-48.
    7. Ryan Hawthorne & Lukasz Grzybowski, 2019. "Narrowing the 'Digital Divide': The Role of Complementarities Between Fixed and Mobile Data in South Africa," CESifo Working Paper Series 7711, CESifo.
    8. Franck Essosinam KARABOU & Komlan Ametowoyo ADEVE, 2018. "ICT and Economic Growth in WAEMU: An Analysis of Labor Productivity," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 12-20.
    9. 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 - Leibniz Information Centre for Economics.
    10. Ezzat Riham Ahmed, 2017. "Fixed-Mobile Substitution in MENA Countries: The Future of Fixed-Line Markets," Review of Network Economics, De Gruyter, vol. 16(4), pages 387-417, December.
    11. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2014. "What is the magnitude of fixed–mobile call substitution? Empirical evidence from 16 European countries," Telecommunications Policy, Elsevier, vol. 38(8), pages 771-782.
    12. Nour, S., 2014. "The impact of ICT in public and private universities in Sudan," MERIT Working Papers 2014-018, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Jahanbakht, Mohammad & Mostafa, Romel, 2020. "Coevolution of policy and strategy in the development of the mobile telecommunications industry in Africa," Telecommunications Policy, Elsevier, vol. 44(4).
    14. 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.
    15. Nour, Samia Satti Osman Mohamed, 2010. "The impact of ICT in the transformation and production of knowledge in Sudan," MERIT Working Papers 2010-063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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