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Substituability between Mobile and Fixed Telephones: Evidence and Implications for India

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  • Muttur Ranganathan Narayana

    (Centre for International Research on the Japanese Economy, Faculty of Economics, The University of Tokyo and Centre for Economic Studies and Policy Institute for Social and Economic Change)

Abstract

Substitutability between mobile and fixed phones is an important consequence of India's telecom sector's deregulation since 1991. This paper tests for substitutability between mobile and fixed phones, based on a binary logit model and using the household sample survey data from the Karnataka State in South India. Estimated cross price elasticity offers empirical evidence for substitutability rather than complementarity between fixed and mobile phone services. This evidence is symmetric in mobile and fixed phone models. The empirical results have implications for on-going policy discussion on subsidization by the Access Deficit Charge and for changing the bases for Universal Service Obligation.

Suggested Citation

  • Muttur Ranganathan Narayana, 2008. "Substituability between Mobile and Fixed Telephones: Evidence and Implications for India," CIRJE F-Series CIRJE-F-550, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2008cf550
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    References listed on IDEAS

    as
    1. Nakil Sung & Yong-Hun Lee, 2002. "Substitution between Mobile and Fixed Telephones in Korea," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 367-374, June.
    2. Rodini, Mark & Ward, Michael R. & Woroch, Glenn A., 0. "Going mobile: substitutability between fixed and mobile access," Telecommunications Policy, Elsevier, vol. 27(5-6), pages 457-476, June.
    3. Garbacz, Christopher & Thompson, Herbert Jr., 2005. "Universal telecommunication service: A world perspective," Information Economics and Policy, Elsevier, vol. 17(4), pages 495-512, October.
    4. Garbacz, Christopher & Thompson Jr, Herbert G., 2007. "Demand for telecommunication services in developing countries," Telecommunications Policy, Elsevier, vol. 31(5), pages 276-289, June.
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    2. 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.
    3. 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, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    4. 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).

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