Competition between Standards and the Prices of Mobile Telecommunication Services: Analysis of Panel Data

Abstract

This paper aims to address the differential effect of intra-standard and inter-standard competition on the prices of mobile telecommunication services, specifically in 3G and beyond. It is hypothesized that inter-standard competition will lower price over time after controlling for per capita GDP, preference diversity, and mobile teledensity. A fixed effects model was estimated using the least squares dummy variable (LSDV) method to empirically test the association, using ARPU as a proxy for price. The findings were inconclusive because though the direction of the effect suggested that standards competition might be reducing prices, it was not significant. Strong time trends in the data and hedging strategies, in which companies deploy multiple standards, might account for the observed weak effects.