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Reducing the level of switching costs in mobile communications: The case of Mobile Number Portability

Author

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  • Maicas, Juan Pablo
  • Polo, Yolanda
  • Javier Sese, F.

Abstract

Switching costs are one of the most important economic forces that affect market competition in mobile communications. Both theoretical and empirical studies have shown that switching costs reduce market competition leading to higher prices, lower product and service quality, and lower customer welfare. Given their negative consequences, national regulatory authorities have designed policies aimed at reducing switching costs and fostering competition. One of the most important of these, in the mobile communications industry, is mobile number portability (MNP). The aim of this paper is to investigate the effect of MNP on switching costs in mobile phone services. First, a hierarchical Bayes model is proposed to measure switching costs at the customer level and to investigate the impact of MNP on them. Second, this study examines the drivers of MNP adoption by customers using a binary logit specification. The results reveal that this regulatory policy has significantly reduced the cost of switching and that MNP adoption partially depends on customer-related variables.

Suggested Citation

  • Maicas, Juan Pablo & Polo, Yolanda & Javier Sese, F., 2009. "Reducing the level of switching costs in mobile communications: The case of Mobile Number Portability," Telecommunications Policy, Elsevier, vol. 33(9), pages 544-554, October.
    • Handle: RePEc:eee:telpol:v:33:y:2009:i:9:p:544-554
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    Citations

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    Cited by:

    1. Polo, Yolanda & Sese, F. Javier & Verhoef, Peter C., 2011. "The Effect of Pricing and Advertising on Customer Retention in a Liberalizing Market," Journal of Interactive Marketing, Elsevier, vol. 25(4), pages 201-214.
    2. Mohammad Sultan Ahmad Ansari & Jamal A. Farooqui & Said Mohammed Gattoufi, 2018. "Emotional Intelligence and Extended Service Profit Chain in Telecom Industry in Oman – An Empirical Validation," International Business Research, Canadian Center of Science and Education, vol. 11(3), pages 133-148, March.
    3. Florez Ramos, Esmeralda & Blind, Knut, 2020. "Data portability effects on data-driven innovation of online platforms: Analyzing Spotify," Telecommunications Policy, Elsevier, vol. 44(9).
    4. Jose Luis Castillo Mezarina, 2021. "The impact of free trade agreements in national markets: Evidence from the telecommunications sector in Latin America," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 860-903, September.
    5. Usero Sánchez, Belén & Asimakopoulos, Grigorios, 2012. "Regulation and competition in the European mobile communications industry: An examination of the implementation of mobile number portability," Telecommunications Policy, Elsevier, vol. 36(3), pages 187-196.
    6. Joachim Freyberger & Bradley J. Larsen, 2022. "Identification in ascending auctions, with an application to digital rights management," Quantitative Economics, Econometric Society, vol. 13(2), pages 505-543, May.
    7. Pacharasut Sujarittanonta, 2017. "Evaluating mobile number portability policy in the Thai mobile telecommunications market," Journal of Regulatory Economics, Springer, vol. 51(2), pages 220-233, April.
    8. Yamakawa, Peter & Rees, Gareth H. & Manuel Salas, José & Alva, Nikolai, 2013. "The diffusion of mobile telephones: An empirical analysis for Peru," Telecommunications Policy, Elsevier, vol. 37(6), pages 594-606.
    9. Lucio Fuentelsaz & Juan Pablo Maicas & Yolanda Polo, 2012. "Switching Costs, Network Effects, and Competition in the European Mobile Telecommunications Industry," Information Systems Research, INFORMS, vol. 23(1), pages 93-108, March.
    10. Gábor Kézdi & Gergely Csorba, 2013. "Estimating Consumer Lock-In Effects from Firm-Level Data," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 431-452, September.
    11. Gabor Kezdi & Gergely Csorba, 2011. "Estimating the Lock-in Effects of Switching Costs from Firm-Level Data," CERS-IE WORKING PAPERS 1108, Institute of Economics, Centre for Economic and Regional Studies.
    12. Amante, Ana & Vareda, João, 2010. "Improving consumer mobility in the mobile voice services market: a comprehensive set of remedies," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 2, International Telecommunications Society (ITS).
    13. Sobolewski, Maciej & Czajkowski, Mikołaj, 2018. "Receiver benefits and strategic use of call externalities in mobile telephony markets," Information Economics and Policy, Elsevier, vol. 44(C), pages 16-27.
    14. Dejan Trifunović & Đorđe Mitrović, 2018. "Pro-Competitive Regulatory Policies For Post-Paid And Pre-Paid Mobile Phone Markets," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(218), pages 85-104, July – Se.
    15. Moniche-Bermejo, Ana, 2022. "Do collective energy switching campaigns engage vulnerable households? Evidence from The Big Switch," Energy Policy, Elsevier, vol. 167(C).
    16. Jonida Gjika & Endirë Bushati, 2023. "Balancing Legal Framework, Regulatory Mechanisms and Competition across Number Portability in Albania," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, November.
    17. Czajkowski, Mikołaj & Sobolewski, Maciej, 2016. "How much do switching costs and local network effects contribute to consumer lock-in in mobile telephony?," Telecommunications Policy, Elsevier, vol. 40(9), pages 855-869.
    18. Jentzsch, Nicola, 2012. "Implications of mandatory registration of mobile phone users in Africa," Telecommunications Policy, Elsevier, vol. 36(8), pages 608-620.
    19. Niloofar Abolfathi & Andrea Fosfuri & Simone Santamaria, 2022. "Out of the trap: Conversion funnel business model, customer switching costs, and industry profitability," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1872-1896, September.
    20. Park, Yuri & Koo, Yoonmo, 2016. "An empirical analysis of switching cost in the smartphone market in South Korea," Telecommunications Policy, Elsevier, vol. 40(4), pages 307-318.
    21. Rebeca Escobar Briones, 2018. "Impacto de las modificaciones en el proceso de portabilidad numérica sobre los servicios de telecomunicación móvil/The impact on telecommunications services of modifications to mobile number portab," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 33(1), pages 3-28.

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