IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v50y2016i1d10.1007_s11149-016-9307-5.html
   My bibliography  Save this article

Pricing strategies and competition in the mobile broadband market

Author

Listed:
  • Joan Calzada

    (Universitat de Barcelona)

  • Fernando Martínez-Santos

    (Competition and Markets Authority and Universitat de Barcelona)

Abstract

This paper analyzes mobile broadband plan prices in 37 countries between 2011 and 2014. Mobile network operators typically commercialize usage-based plans that include an access fee, a usage allowance (number of GB included in the tariff plan), and a penalty system should consumers exceed the contracted allowance. Our empirical model shows that the prices of these plans are lower than those of unlimited contracts, and that they depend on the type of penalty that is used. The prices also reflect service characteristics, including the technology provided, the download speed, and telephone call allowances. Plans that bundle mobile broadband plans with smartphone devices have longer contract duration and may be more expensive than plans that only include a SIM card. Specifically, broadband service plans are priced higher when they include an iPhone or a Samsung smartphone. The paper also discusses the impact of market structure and entry regulation on prices.

Suggested Citation

  • Joan Calzada & Fernando Martínez-Santos, 2016. "Pricing strategies and competition in the mobile broadband market," Journal of Regulatory Economics, Springer, vol. 50(1), pages 70-98, August.
    • Handle: RePEc:kap:regeco:v:50:y:2016:i:1:d:10.1007_s11149-016-9307-5
    DOI: 10.1007/s11149-016-9307-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11149-016-9307-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11149-016-9307-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michał Grajek & Lars-Hendrik Röller, 2012. "Regulation and Investment in Network Industries: Evidence from European Telecoms," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 189-216.
    2. Calzada, Joan & Martínez-Santos, Fernando, 2014. "Broadband prices in the European Union: Competition and commercial strategies," Information Economics and Policy, Elsevier, vol. 27(C), pages 24-38.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    4. Xavier Gabaix & David Laibson, 2018. "Shrouded attributes, consumer myopia and information suppression in competitive markets," Chapters, in: Victor J. Tremblay & Elizabeth Schroeder & Carol Horton Tremblay (ed.), Handbook of Behavioral Industrial Organization, chapter 3, pages 40-74, Edward Elgar Publishing.
    5. Ting Zhu & Hongju Liu & Pradeep Chintagunta, 2015. "Wireless Carriers’ Exclusive Handset Arrangements: an Empirical Look at the iPhone," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 2(2), pages 177-190, June.
    6. Christos Genakos & Tommaso Valletti & Frank Verboven, 2018. "Evaluating market consolidation in mobile communications," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 45-100.
    7. Mattia Nardotto & Tommaso Valletti & Frank Verboven, 2015. "Unbundling The Incumbent: Evidence From Uk Broadband," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 330-362, April.
    8. 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.
    9. Aviv Nevo & John L. Turner & Jonathan W. Williams, 2016. "Usage‐Based Pricing and Demand for Residential Broadband," Econometrica, Econometric Society, vol. 84, pages 411-443, March.
    10. Maya Bacache & Marc Bourreau & Germain Gaudin, 2014. "Dynamic Entry and Investment in New Infrastructures: Empirical Evidence from the Fixed Broadband Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 179-209, March.
    11. Lee, Sangwon & Marcu, Mircea & Lee, Seonmi, 2011. "An empirical analysis of fixed and mobile broadband diffusion," Information Economics and Policy, Elsevier, vol. 23(3), pages 227-233.
    12. Nicholas Economides & Benjamin E. Hermalin, 2015. "The strategic use of download limits by a monopoly platform," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 297-327, June.
    13. Eugenio J. Miravete & Ignacio Palacios-Huerta, 2014. "Consumer Inertia, Choice Dependence, and Learning from Experience in a Repeated Decision Problem," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 524-537, July.
    14. Haucap, Justus & Heimeshoff, Ulrich & Lange, Mirjam R. J., 2014. "The impact of tariff diversity on broadband diffusion: An empirical analysis," DICE Discussion Papers 156, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Grzybowski, Lukasz & Liang, Julienne, 2015. "Estimating demand for fixed-mobile bundles and switching costs between tariffs," Information Economics and Policy, Elsevier, vol. 33(C), pages 1-10.
    16. Dauvin, Magali & Grzybowski, Lukasz, 2014. "Estimating broadband diffusion in the EU using NUTS 1 regional data," Telecommunications Policy, Elsevier, vol. 38(1), pages 96-104.
    17. Cambini, Carlo & Jiang, Yanyan, 0. "Broadband investment and regulation: A literature review," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 559-574, November.
    18. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
    19. Greenstein, Shane & McDevitt, Ryan, 2011. "Evidence of a modest price decline in US broadband services," Information Economics and Policy, Elsevier, vol. 23(2), pages 200-211, June.
    20. Srinuan, Pratompong & Srinuan, Chalita & Bohlin, Erik, 2012. "Fixed and mobile broadband substitution in Sweden," Telecommunications Policy, Elsevier, vol. 36(3), pages 237-251.
    21. Bouckaert, Jan & van Dijk, Theon & Verboven, Frank, 2010. "Access regulation, competition, and broadband penetration: An international study," Telecommunications Policy, Elsevier, vol. 34(11), pages 661-671, December.
    22. Harald Gruber & Pantelis Koutroumpis, 2013. "Competition enhancing regulation and diffusion of innovation: the case of broadband networks," Journal of Regulatory Economics, Springer, vol. 43(2), pages 168-195, April.
    23. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    24. Gijón, Covadonga & Garín-Muñoz, Teresa & Pérez-Amaral, Teodosio & López-Zorzano, Rafael, 2013. "Satisfaction of individual mobile phone users in Spain," Telecommunications Policy, Elsevier, vol. 37(10), pages 940-954.
    25. Anja Lambrecht & Katja Seim & Bernd Skiera, 2007. "Does Uncertainty Matter? Consumer Behavior Under Three-Part Tariffs," Marketing Science, INFORMS, vol. 26(5), pages 698-710, 09-10.
    26. Srinuan, Chalita & Srinuan, Pratompong & Bohlin, Erik, 2011. "An analysis of mobile internet service in Thailand: Implications for bridging digital divide," 8th ITS Asia-Pacific Regional Conference, Taipei 2011: Convergence in the Digital Age 52326, International Telecommunications Society (ITS).
    27. Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kevin K. Wang & Michael D. Wittman & Thomas Fiig, 2023. "Dynamic offer creation for airline ancillaries using a Markov chain choice model," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(2), pages 103-121, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Calzada, Joan & Martínez-Santos, Fernando, 2014. "Broadband prices in the European Union: Competition and commercial strategies," Information Economics and Policy, Elsevier, vol. 27(C), pages 24-38.
    2. I. Vogelsang, 2015. "Will the U.S. and EU telecommunications policies converge? A survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(2), pages 117-155, June.
    3. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    4. Mirjam R. J. Lange, 2017. "Tariff diversity and competition policy: drivers for broadband adoption in the European Union," Journal of Regulatory Economics, Springer, vol. 52(3), pages 285-312, December.
    5. Briglauer, Wolfgang & Cambini, Carlo & Melani, Sauro, 2016. "How to Fill the Digital Gap? The (Limited) Role of Regulation," VfS Annual Conference 2016 (Augsburg): Demographic Change 145480, Verein für Socialpolitik / German Economic Association.
    6. Briglauer Wolfgang & Frübing Stefan & Vogelsang Ingo, 2014. "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey," Review of Network Economics, De Gruyter, vol. 13(3), pages 227-270, September.
    7. Viktória KOCSIS & Paul de BIJL & Rob van der NOLL & Bert TIEBEN, 2015. "Reconsidering ex ante Regulation in the Dutch Electronic Communications Market," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(98), pages 61-83, 2nd quart.
    8. Joan Calzada & Begoña García-Mariñoso & Jordi Ribé & Rafael Rubio & David Suárez, 2018. "Fiber deployment in Spain," Journal of Regulatory Economics, Springer, vol. 53(3), pages 256-274, June.
    9. Cave, Martin, 2014. "The ladder of investment in Europe, in retrospect and prospect," Telecommunications Policy, Elsevier, vol. 38(8), pages 674-683.
    10. Briglauer, Wolfgang & Gugler, Klaus & Haxhimusa, Adhurim, 2016. "Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states," Telecommunications Policy, Elsevier, vol. 40(8), pages 729-742.
    11. Ben Dkhil, Inès, 2014. "Investment in Fixed Broadband Networks and Access Regulation in Developed and Developing countries: Panel Data Applications," MPRA Paper 59337, University Library of Munich, Germany.
    12. Kongaut, Chatchai & Bohlin, Erik, 2014. "Unbundling and infrastructure competition for broadband adoption: Implications for NGA regulation," Telecommunications Policy, Elsevier, vol. 38(8), pages 760-770.
    13. Parcu, Pier Luigi & Silvestri, Virginia, 2014. "Electronic communications regulation in Europe: An overview of past and future problems," Utilities Policy, Elsevier, vol. 31(C), pages 246-255.
    14. Houngbonon, Georges Vivien & Jeanjean, François, 2016. "What level of competition intensity maximises investment in the wireless industry?," Telecommunications Policy, Elsevier, vol. 40(8), pages 774-790.
    15. Fourberg, Niklas & Korff, Alex, 2020. "Fiber vs. vectoring: Limiting technology choices in broadband expansion," Telecommunications Policy, Elsevier, vol. 44(8).
    16. Haucap, Justus & Heimeshoff, Ulrich & Lange, Mirjam R. J., 2014. "The impact of tariff diversity on broadband diffusion: An empirical analysis," 25th European Regional ITS Conference, Brussels 2014 101403, International Telecommunications Society (ITS).
    17. Grzybowski, Lukasz & Hasbi, Maude & Liang, Julienne, 2018. "Transition from copper to fiber broadband: The role of connection speed and switching costs," Information Economics and Policy, Elsevier, vol. 42(C), pages 1-10.
    18. Maya Bacache & Marc Bourreau & Germain Gaudin, 2014. "Dynamic Entry and Investment in New Infrastructures: Empirical Evidence from the Fixed Broadband Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 179-209, March.
    19. Briglauer, Wolfgang & Gugler, Klaus, 2018. "Go for gigabit? First evidence on economic benefits of (ultra-)fast broadband technologies in Europe," ZEW Discussion Papers 18-020, ZEW - Leibniz Centre for European Economic Research.
    20. Christos Genakos & Tommaso Valletti & Frank Verboven, 2018. "Evaluating market consolidation in mobile communications," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 45-100.

    More about this item

    Keywords

    Telecommunications; Mobile broadband; Price discrimination; Smartphones; Competition; Regulation;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:50:y:2016:i:1:d:10.1007_s11149-016-9307-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.