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The Impact of Mobile Phone Diffusion on the Fixed-Link Network

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  • Barros, Pedro Luis Pita
  • Cadima, Nuno

Abstract

There is currently little knowledge on the consequences of diffusion of cellular technology on the incumbent fixed-link telephony service. We address this issue by estimation of diffusion curves for both technologies, allowing for potential cross-effects, using data from a small European economy. Our main findings are a negative effect of the mobile phone diffusion on the fixed-link telephony penetration rate. The effect is, roughly, a ten percent decrease in the fixed-link penetration rate (in comparison with the absence of mobile phones). No effect on the reverse direction seems to exist. Mobile phone market growth seems to be determined essentially by technological advances.

Suggested Citation

  • Barros, Pedro Luis Pita & Cadima, Nuno, 2000. "The Impact of Mobile Phone Diffusion on the Fixed-Link Network," CEPR Discussion Papers 2598, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2598
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2012. "How large is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 European countries," DICE Discussion Papers 49, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Bos Jaap W.B. & Stam Erik, 2011. "Gazelles, Industry Growth and Structural Change," Research Memorandum 018, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Gamboa, Luis Fernando & Otero, Jesús, 0. "An estimation of the pattern of diffusion of mobile phones: The case of Colombia," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 611-620, November.
    4. Grajek, Michal & Kretschmer, Tobias, 2009. "Usage and diffusion of cellular telephony, 1998-2004," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 238-249, March.
    5. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2011. "Does the growth of mobile markets cause the demise of fixed networks? Evidence from the European Union," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52144, International Telecommunications Society (ITS).
    6. Gagnepain, Philippe & Pereira, Pedro, 2007. "Entry, costs reduction, and competition in the Portuguese mobile telephony industry," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 461-481, June.
    7. Krzysztof Dzieciolowski & John Galbraith, 2004. "Indicators of wireline/wireless competition in the market for telecommunication services," CIRANO Project Reports 2004rp-21, CIRANO.
    8. Duarte Brito & Pedro Pereira, 2005. "Ownership Structure of Cable Networks and Competition in Local Access," Working Papers 09, Portuguese Competition Authority.
    9. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2003. "An assessment of telecommunications reform in developing countries," Information Economics and Policy, Elsevier, vol. 15(4), pages 443-466, December.
    10. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(1), pages 89-113, November.
    11. K. Andersson & Ø Foros & F. Steen, 2009. "Text and voice: complements, substitutes or both?," Industrial and Corporate Change, Oxford University Press, vol. 18(6), pages 1231-1247, December.
    12. Lukasz Grzybowski & Pedro Pereira, 2007. "Merger Simulation in Mobile Telephony in Portugal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(3), pages 205-220, November.
    13. Alessandro Sembenelli & Davide Vannoni, 2001. "Market Structures with Multi-product Firms: Welfare Analysis and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 161-179, June.
    14. Lukasz Grzybowski & Chiraz Karamti, 2010. "Competition In Mobile Telephony In France And Germany," Manchester School, University of Manchester, vol. 78(6), pages 702-724, December.
    15. Tom Björkroth, 2002. "Market Structure and Welfare in the Finnish Market for Long-Distance Telecommunications," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 87-101, Autumn.
    16. Harbord, David & Pagnozzi, Marco, 2008. "On-Net/Off-Net Price Discrimination and 'Bill-and-Keep' vs. 'Cost-Based' Regulation of Mobile Termination Rates," MPRA Paper 14540, University Library of Munich, Germany.
    17. Kris De Jaegher, 2009. "Asymmetric Substitutability: Theory And Some Applications," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 838-855, October.
    18. 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.
    19. 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.
    20. Madden, Gary & Coble-Neal, Grant, 2004. "Economic determinants of global mobile telephony growth," Information Economics and Policy, Elsevier, vol. 16(4), pages 519-534, December.
    21. Wolfgang Briglauer & Anton Schwarz & Christine Zulehner, 2011. "Is fixed-mobile substitution strong enough to de-regulate fixed voice telephony? Evidence from the Austrian markets," Journal of Regulatory Economics, Springer, vol. 39(1), pages 50-67, February.

    More about this item

    Keywords

    Mobile Phone Diffusion; Telecommunications;

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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