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Empirical Study of Effect of Deregulation, Competition, and Contents on Mobile Phone Diffusion: Case of the Japanese 3G Market

Listed author(s):
  • Akematsu, Yuji
  • Abu, Sheikh Taher
  • Tsuji, Masatsugu
Registered author(s):

    The Japanese mobile market has recently shown a remarkable growth in the last decade, with more than 106.2 million 3G (3rd Generation, or W-CDMA) subscribers and 4.4 million 2G (2nd Generation, or PDC) as of December 2009. This paper attempts to analyze factors promoting Japanese mobile phone, focusing on 3G technologies. Factors promoting it can be summarized as follows: (1) deregulations by government, such as MNP (Mobile Number Portability) and collocation; (2) competition among carriers, such as introduction of new charge plans; (3) technological development, such as connection speed; and (4) contents and applications. This paper utilizes the panel data of three main carriers of the mobile phone market, namely, NTTdocomo, au (KDDI), and Softbank. As for a model for estimation, we apply that of Madden and Coble-Neal [2004] which studied the relationship between fixed and mobile phone with the panel data by the dynamic random effects estimation. Dynamic models are based not only on the assumption such that carriers do not instantaneously adjust to satisfy their long-term demand but also on network externalities. Besides, the paper applies a dynamic panel data model in order to take care of the endogeneity problem. This paper deals with this problem rigorously by applying Arellano-Bond estimator (Arellano and Bond [1991] and Arellano and Bover [1995]) which estimates exogeneous or predetermined variables, in addition to instrumental variables, using the two-step generalized method of moments (GMM). Based on this framework, this paper identifies service innovations such as entertainment, flat rate charges are found significant for the 3G mobile phone diffusion.

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    Paper provided by International Telecommunications Society (ITS) in its series 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation with number 1.

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    Date of creation: 2010
    Handle: RePEc:zbw:itse10:1
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    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. 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.
    3. Iimi, Atsushi, 2005. "Estimating demand for cellular phone services in Japan," Telecommunications Policy, Elsevier, vol. 29(1), pages 3-23, February.
    4. Anusua Datta & Sumit Agarwal, 2004. "Telecommunications and economic growth: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1649-1654.
    5. Economides, Nicholas, 1996. "Network externalities, complementarities, and invitations to enter," European Journal of Political Economy, Elsevier, vol. 12(2), pages 211-233, September.
    6. Takanori Ida & Toshifumi Kuroda, 2006. "Discrete Choice Analysis of Demand for Broadband in Japan," Journal of Regulatory Economics, Springer, vol. 29(1), pages 5-22, 01.
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