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Assessing the Substitutability of Mobile and Fixed Internet: The Impact of 5G Services on Consumer Valuation and Price Elasticity

Author

Listed:
  • Mikołaj Czajkowski

    (University of Warsaw, Faculty of Economic Sciences)

  • Wojciech Zawadzki

    (University of Warsaw, Faculty of Economic Sciences)

  • Grzegorz Bernatek

    (Audytel S.A.)

  • Maciej Sobolewski

    (University of Warsaw, Faculty of Economic Sciences)

Abstract

In this study, we explore the dynamics of consumer choices in the Polish telecommunications market, focusing on preferences and valuations for home fixed, home mobile, and purely mobile internet connections. Key attributes such as speed, latency, data limits, and cost are examined. Central to our research is the investigation of how the integration of 5G technology might influence demand elasticity. Using a detailed discrete choice experiment, we apply a mixed logit model with random parameters to analyze stated choice data, enabling us to unravel the complexities of demand elasticity, especially in terms of own- and cross-price elasticities. This approach facilitates an assessment of the degree of substitutability between fixed and mobile internet services. Our findings indicate a moderate substitution effect between fixed and mobile internet services. Results from a Small but Significant and Non-transitory Increase in Price (SSNIP) test suggest that these markets should continue to be regulated separately, mirroring the distinct regulation observed in fixed and mobile telephony. Furthermore, simulations provide insights into potential future market shifts with the advent of 5G services. This paper contributes significantly to the discourse on fixed-mobile internet substitution and offers vital insights for defining markets in antitrust discussions, competitive agreements, and potential mergers within the telecom sector.

Suggested Citation

  • Mikołaj Czajkowski & Wojciech Zawadzki & Grzegorz Bernatek & Maciej Sobolewski, 2024. "Assessing the Substitutability of Mobile and Fixed Internet: The Impact of 5G Services on Consumer Valuation and Price Elasticity," Working Papers 2024-15, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2024-15
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    More about this item

    Keywords

    Fixed-Mobile Internet Substitution; Consumer Preferences in Telecommunications; Mobile Broadband Access; Home Internet Connectivity; Discrete Choice Analysis; 5G Network Impact; Demand Elasticity in Internet Services; Stated Preference Methodology; Telecommunications Market Analysis; Price Elasticity in Internet Access;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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