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Fixed-to-mobile substitution in the European Union

Lukasz Grzybowski

Telecommunications Policy, 2014, vol. 38, issue 7, 601-612

Abstract: This paper analyzes substitution between access to fixed-line and mobile telephony in the European Union using cross-section panel data on households’ choices of telecommunications technologies in years 2005–2010. We estimate a structural model of household׳s demand for access to: (i) fixed-line only; (ii) mobile only; and (iii) both fixed-line and mobile. We find that growing Internet usage increases the share of ‘fixed + mobile’ households, which suggests that households keep their fixed-line connection to access Internet. However, the spread of 3G and cable broadband access decreases the share of ‘fixed + mobile’ households and increases the share of ‘mobile only’ households. Hence, fixed-to-mobile substitution was slowed down by the spread of Internet but it may continue with the spread of mobile broadband. Furthermore, bundling of telecommunications services increases the share of ‘fixed + mobile’ households and decreases the shares of ‘mobile only’ and ‘fixed only’ households. Therefore, operators which can bundle fixed-line connection with Internet or mobile services may slow down fixed-to-mobile substitution.

Keywords: Fixed-to-mobile substitution; Internet; Mobile broadband; Bundling (search for similar items in EconPapers)
Date: 2014
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Working Paper: Fixed-to-Mobile Substitution in the European Union (2012) Downloads
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DOI: 10.1016/j.telpol.2014.02.002

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