What Caused the Smartphone Revolution?

100 Pages Posted: 24 Sep 2019

See all articles by David S. Evans

David S. Evans

Global Economics Group; University College London

Howard H. Chang

Global Economics Group, LLC

Steven Joyce

Global Economics Group, LLC

Date Written: September 17, 2019

Abstract

This paper examines the contribution of 3G and 4G cellular technologies to the smartphone revolution. It relies on quasi-natural experiments in which these technologies were launched at different times and deployed at different rates across countries while the availability of handsets, operating systems, and apps were similar. Using panel data regressions, we find that average smartphone connections per capita would have been at least 68 percent lower if the countries only had 2G cellular networks and average cellular data use would have been at least 41 percent lower if the countries had 3G coverage but did not have 4G coverage as of 2017. For the US, much of the adoption and online use of smartphones would not have occurred in the absence of 3G and 4G, leading to a substantial loss of consumer surplus. Other evidence indicates that Wi-Fi networks were not sufficient for the widespread adoption of smartphones, app development, or increased use of apps by consumers and that the development of major apps was an endogenous response to the deployment of advanced cellular technologies.

Keywords: smartphone revolution, cellular technology, cellular carriers, network effects, smartphones, iPhone, Android, general purpose technology, FRAND, standards development organizations, 3GPP, app ecosystem, standing on shoulder of giants

JEL Classification: D4, D7, J21, K23, L14, L15, L31, L8, L41, N1, N7, N8, O12, O14, O19, O31, O33, O34, O35

Suggested Citation

Evans, David S. and Chang, Howard H. and Joyce, Steven, What Caused the Smartphone Revolution? (September 17, 2019). Available at SSRN: https://ssrn.com/abstract=3455247 or http://dx.doi.org/10.2139/ssrn.3455247

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Steven Joyce

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