Substitution or Complementarity between Fixed and Mobile ...
Substitution or Complementarity between Fixed and Mobile Broadband
Transcript of Substitution or Complementarity between Fixed and Mobile Broadband
Confidential
Substitution or Complementarity between
Fixed and Mobile Broadband services?
Youngsoo Kim, Gwangjae Jung, and Robert Kauffman
Singapore Management University
Confidential
Research Background
<Source: Morgan Stanely
Research, 2010>
Confidential
Motivation
The relationship is not clearly identified Substitution (Garbacz and Thomson 2005; Grajek and Kretshmer
2009; Narayana 2008; Rodini et. al. 2003)
Complementarity (Albon 2006; Nielsen and Fjuk 2010)
Lack of individual level of analysis Aggregate penetration rate of broadband internet
Cross-price elasticity
Confidential
Motivation
Environmental change in internet usage Emergence of smart devices / mobile internet
Confidential
Motivation and Research Questions
Cross-effects between mobile and fixed broadband
services at an individual level of subscription
The effect of smartphone subscription to the
change in mobile/fixed broadband services
Confidential
Research Methodology
OLS to identify the cross effects between MBB and FBB
Use broadband bandwidth to translate the subscription
changes
Two different types of signals to observe bandwidth
changes
State-dependent preference (Savage 1954) ∆FBB = f(MBB, DataCap, Smartphones, Age, Gender, Dwelling_Type, Region, Time)
∆MBB = f(FBB, Smartphones, Age, Gender, Dwelling_Type, Region, Time)
Action-dependent preference (Karni 2006) ∆FBB f(∆MBB, ∆DataCap, Smartphones, Age, Gender, Dwelling_Type, Region,
Time)
∆MBB f(∆FBB, Smartphones, Age, Gender, Dwelling_Type, Region, Time)
Confidential
Data Description
Singaporean retail telecom company
Period: Jun/01/2007 – May/31/2012 (5 years)
125,080 subscription events in fixed broadband services
(include new subscription, switching, and termination)
40,964 cases in mobile broadband services
11 fixed broadband services (from 0 to 1Gbps)
8 mobile broadband services (from 0 to 42Mbps)
Confidential
State-dependent preference: FBB
Customers with
higher MBB tend
to switch higher
FBB
(except for MBB
lower than
1.2mbps)
Given state of MBB FBB changes
Confidential
State-dependent preference: MBB
Customers with
higher FBB tend
to switch higher
MBB
Given state of FBB MBB changes
Confidential
Action-dependent preference: FBB
Complementary effect
in overall
Positive change in MBB
complementarity
Negative change in MBB
substitution
ex-ante change in MBB ex-post change in FBB
Confidential
Action-dependent preference: MBB
No significant effect
in overall
Positive change in FBB
complementarity
Negative change in FBB
substitution
ex-ante change in FBB ex-post change in MBB
Confidential
Other Results
Smartphone Effects The use of smartphone services positively affects the change in both
FBB and MBB
Time Effects Increasing trend of switching to higher bandwidth (either MBB or
FBB) after smartphone services were introduced
Demographic Effects Male subscribers want higher bandwidth than females
Subscribers aged between 30 and 50 want more bandwidth than
others
Confirmed wealth effects (region/type of residence)
Confidential
Discussion
Implication Complementarity between mobile and fixed broadband services in
perspective of consumers’ service subscription
Different promotion strategy based on the types of signals
Observing the change in broadband services gives more
diversification of strategy than observing the current state of
services
Further research Integrated framework to identify the relationship among data-related
services including voice calls, SMS, and data in mobile phone
services
Relationship among data consumptions between services