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Are OTT messaging and mobile telecommunication an interrelated market? An empirical analysis

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  • Wellmann, Nicolas

Abstract

OTT messengers such as Facebook and WhatsApp have gained wide popularity among mobile users while the traffic of text messaging is in strong decline. As such, there is a debate over whether both services are interrelated and constitute a joint product market, which has important implications for the current wave of mergers in the mobile industry and regulation policy. To the best of our knowledge, this work is the first to provide an empirical analysis of how the consumption of OTT messengers affects demand for text messaging and mobile voice services. We make use of an innovative dataset which includes very detailed information on smartphone usage in Norway and consider a novel approach to address this question which is embedded in the complexity of two-sided markets. Interestingly, our findings suggest that OTT messengers complement demand for traditional mobile telecommunication services for this context. Consequently, both markets are interrelated but do not constitute a joint market from the perspective of competition policy in Norway. Moreover, we find an explanation for why reductions of text messaging usage have been so drastic in some countries and an analogous development for mobile voice is rather unlikely. Finally, our empirical results provide a new perspective on the modelling of consumer utility in communication networks in the theoretical literature.

Suggested Citation

  • Wellmann, Nicolas, 2019. "Are OTT messaging and mobile telecommunication an interrelated market? An empirical analysis," Telecommunications Policy, Elsevier, vol. 43(9).
    • Handle: RePEc:eee:telpol:v:43:y:2019:i:9:s0308596117303804
    DOI: 10.1016/j.telpol.2019.101831
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    More about this item

    Keywords

    Technological change; OTT messengers; Mobile telecommunication; Market definition; Regulation; Competition policy; Antitrust; Mature markets; Communication behaviour;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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