Mobile-Only Consumers Arise from Heterogeneous Valuation of Fixed Services

25 Pages Posted: 12 Feb 2016 Last revised: 21 Sep 2017

See all articles by Julienne Liang

Julienne Liang

France Telecom

Marc Petulowa

Université Montpellier I, Department of Economics, Students; France Telecom Orange Group

Date Written: September 17, 2017

Abstract

Mobile-only users are usually perceived as a consequence of fixed-mobile substitution. This study uses a unique dataset based on a survey in France, combined with interviewee's telecommunications billing data, to reveal heterogeneous consumer preferences for fixed services. With the same mixed logit model we estimate the willingness to pay (WTP) for fixed communications services and fixed-mobile relationship. Results show a very large heterogeneity of WTP for fixed services among consumers. In addition, we show that fixed and mobile data are complement for all consumers. Mobile-only consumers have a much lower but non-zero WTP, and higher price sensitivity compared to fixed-mobile consumers. Consequently, an increase in the fixed offer price would reduce the demand for fixed service. Heterogeneous preferences for fixed services constitute an alternative explanation for the existence of mobile-only users, despite the complementary nature of fixed and mobile broadband. Counter-factual simulations show that the share of mobile-only could also be driven by the way to subsidize mobile handset. For instance, making the handset subsidy only available to fixed-mobile quadruple play subscribers could reduce the share of mobile-only by half.

Keywords: fixed mobile dependence, heterogeneous preferences, substitution versus complementarity, mobile only

JEL Classification: L43, L50, L96

Suggested Citation

Liang, Julienne and Petulowa, Marc, Mobile-Only Consumers Arise from Heterogeneous Valuation of Fixed Services (September 17, 2017). Available at SSRN: https://ssrn.com/abstract=2730875 or http://dx.doi.org/10.2139/ssrn.2730875

Julienne Liang (Contact Author)

France Telecom ( email )

France

Marc Petulowa

Université Montpellier I, Department of Economics, Students ( email )

Avenue Raymond Dugrand, CS 79606
Montpellier Cedex 1, F-34000
France

France Telecom Orange Group ( email )

78 rue Olivier de Serres
Paris, Seine 75015
France

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