Assessment of First Comer Advantages and Network Effects; the Case of Turkish GSM Market

Ayhan Tözer

No 35, 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation from International Telecommunications Society (ITS)

Abstract: First comer advantages and network effects are frequently stated as among the most important determinants of market structures and this is particularly relevant for network economies including telecommunications markets. Connected to this, regulatory tools such as number portability have frequently been used to reduce market imperfections resulting from these effects. Within this context, this paper aims to analyze the role of these factors in creating the current market structure of Turkish GSM sector. By examining relevant data such as development of market shares in a historical perspective and by making use of consumer surveys, it is concluded that the dominant operator has benefited from being first comer in the market and established a stable market share (power) due to network effects that are used by this firm deliberately to entrench its position especially in the form of switching costs, scale economies, brand image and tariff (on-net vs. off-net pricing) differentiation; however, it is also observed that introduction of number portability lead to reduction in switching costs, increasing market competition.

Keywords: First comer advantages; Network effects; Mobile telephony (GSM); number portability; Competition; Regulation and Consumer preferences (search for similar items in EconPapers)
Date: 2010
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