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Static and dynamic causes of the decline in the price of mobile telecommunication services

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  • Orange, François Jeanjean

Abstract

Telecommunication industry is characterized by a sharp fall in unit price which highly benefits to consumers. This article aims to identify the main parameters that lead to such a fall. Using a 13-countries wireless market dataset, it shows that investment actually drives the exponential growth of traffic. As the growth of revenues are much lower, the price of MByte decreases sharply.Telecom operators need some margin to invest. The increased margin increases subscription price, however, in the same time, it also increases investment. The paper shows that the impact on investment highly outweighs the impact on subscription price. As a result, the overall impact of increased margin is the fall of Mbyte price.

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  • Orange, François Jeanjean, 2013. "Static and dynamic causes of the decline in the price of mobile telecommunication services," 24th European Regional ITS Conference, Florence 2013 88490, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse13:88490
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    1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
    2. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    3. Anusua Datta & Sumit Agarwal, 2004. "Telecommunications and economic growth: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1649-1654.
    4. Jeanjean, François, 2010. "Competition through Technical Progress," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 18, International Telecommunications Society (ITS).
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