Mobile Telephony in Emerging Markets: The Importance of Dual-SIM Phones

20 Pages Posted: 14 Apr 2015 Last revised: 17 Jul 2018

See all articles by Kjetil Andersson

Kjetil Andersson

University of Agder - School of Management

Daniel Göller

University of Agder - Department of Economics and Finance, School of Business and Law

Bjørn Hansen

Telenor

Date Written: April 13, 2015

Abstract

A substantial share of customers in emerging markets use dual-SIM phones and subscribe to two mobile networks. A primary motive for so called multi-simming is to take advantage of cheap on-net services from both networks. In our modelling effort, we augment the seminal model of competing telephone networks a la Laffont, Rey and Tirole (1998b) by a segment of flexible price hunters that may choose to multi-sim. According to our findings, in equilibrium, the networks set a high off-net price in the linear tariffs to achieve segmentation. This induces the price hunters to multi-sim. We show that increased deployment of dual-SIM phones may induce a mixing equilibrium with high expected on-net prices. Thus, somewhat paradoxically, deployment of a technology that increases substitutability, and thereby competition, may end up raising prices.

Keywords: Mobile networks, multihoming, dual-SIM phones, termination rates

JEL Classification: D43, L13, L96

Suggested Citation

Andersson, Kjetil and Göller, Daniel and Hansen, Bjørn, Mobile Telephony in Emerging Markets: The Importance of Dual-SIM Phones (April 13, 2015). Available at SSRN: https://ssrn.com/abstract=2593722 or http://dx.doi.org/10.2139/ssrn.2593722

Kjetil Andersson

University of Agder - School of Management ( email )

N-4604 Kristiansand
Norway

Daniel Göller (Contact Author)

University of Agder - Department of Economics and Finance, School of Business and Law ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Bjørn Hansen

Telenor ( email )

Norway

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