The Impact of Access to Over-the-Top Services on Preferences for Mobile Services: A Conjoint Analysis of Urban and Rural Mobile Users in Nigeria

Abstract

In Sub-Saharan Africa, Internet access, predominantly via mobile broadband, is a luxury mostly accessible to the educated and urban population. The use of over-the-top (OTT) applications are creating uncertainties for mobile carriers in pay-as-you-go markets; as it substitutes voice calling (VC) and texting. Using a choice-based conjoint experiment with a sample of 390 urban and rural mobile users in Nigeria, this paper investigates the economic cost and tradeoff between different mobile services, and highlights differences in the preferences of mobile users in urban and rural Nigeria. The results show that OTT is a substitute for text, and as the VC minutes and number of text on the mobile plan increases, the substitution effect declines. OTT access also reduces the probability of a mobile user not purchasing a mobile service. It is also found that users are willing to pay the most for full Internet access, and then OTT, VC and least of all, text. The results provide evidence of significant difference in the preferences of urban and rural mobile users, with urban users having a higher preference for OTT than rural users.

This note is to confirm that Erezi Ogbo is a full-time graduate student at Carnegie Mellon University. I am Miss Ogbo’s PhD advisor and I endorse this submission. Douglas Sicker, Lord Endowed Chair, Department Head of Engineering and Public Policy, Professor of Engineering and Computer Science, Carnegie Mellon University, AD0VT

Keywords: over-the-top, mobile services, rural, conjoint analysis, Sub-Saharan Africa