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How much do switching costs and local network effects contribute to consumer lock-in in mobile telephony?

Mikolaj Czajkowski () and Maciej Sobolewski ()

Telecommunications Policy, 2016, vol. 40, issue 9, 855-869

Abstract: Our study focuses on the identification and measurement of switching costs and local network effects in mobile telecommunications. As these two phenomena are the two components of consumer lock-in, omitting one of them likely results in biased estimates of the second, limiting applicability to policy relevant questions. Yet, there have been only a few attempts to integrate them into one model of subscriber behavior. Our study adds to this stream of research by applying a discrete choice experiment designed specifically to model subscription choices on a representative sample of mobile phone users in Poland. We find that the effective prices of calls appear to be a major determinant of operator choice. Switching costs continue to affect consumer behavior despite the introduction of number portability. Local network effects represent a smaller, albeit significant, component of consumer lock-in. Subscribers are heterogeneous with respect to the magnitudes of both lock-in components.

Keywords: Switching costs; Local network effects; Mobile telecommunications; Mobile number portability; Stated preference; Discrete choice experiment; Random parameters logit model (search for similar items in EconPapers)
Date: 2016
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Related works:
Working Paper: Switching Costs and Network Effects – How Much Do they Really Matter in Mobile Telecommunications? (2013) Downloads
Working Paper: Estimation of switching costs and network effects in mobile telecommunications in Poland (2013) Downloads
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DOI: 10.1016/j.telpol.2015.10.001

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