Battle of the Internet Channels: How Do Mobile and Fixed-Line Quality Drive Internet Use?

Abstract

We study whether and under what conditions mobile Internet networks compete with traditional fixed-line Internet networks by examining how the quality of local fixed-line Internet service influences mobile Internet adoption and use. Empirical analysis shows that a 1 megabits per second (Mbps) increase in local fixed-line Internet speed leads to a 14.9% decline in the likelihood of purchasing a mobile data plan. However, we show there are substantial differences in the extent to which users view these channels as competitors based on individual- and location-specific characteristics and the nature of the application. Fixed-line Internet speed has no effect on the use of mobile offline services, such as taking photos or videos, that do not require a real-time Internet connection. Younger users and those who live in areas with lower fixed-line Internet speeds find the channels to be closer competitors. The online appendix is available at https://doi.org/10.1287/isre.2018.0776 .