Abstract

The unlimited data plan has been pointed out as one of the main reasons for the increase in household communication costs while accelerating the spread and evolution of mobile services. This study empirically analyzed what factors affect consumers' unlimited data plan choices in the mobile Internet market and how switching between data plans affect consumer benefits, and data from the period 2019 to 2022 of the Korea Media Panel Survey were employed. The results of Probit model suggest that the lower the age and higher the income, the higher the probability of changing the data plan, and the customers who subscribed to the bundling service are more likely to change from a usage-based plan to a data unlimited plan. The results from Mixed Conditional Logit model suggest that the consumers’ benefit decreases when changing from a usage-based plan to a data unlimited plan, while the benefit increases when changing in the opposite direction. Despite the predictability and convenience of the unlimited plan, it can be interpreted that disutility occurs when a customer chooses a plan with a high rate exceeding the customer's optimal usage in a situation where there are few subdivided data plans, which has implications for operators’ pricing strategies and government policies.

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