Abstract
Most countries have allocated 3G spectrum and are in the process of allocating advanced wireless services and 4G spectrum, both of which promise subscribers significantly faster broadband speeds. Operators anticipate that subscribers will adopt these services swiftly thereby justifying the large investments. Yet, why is it the case that only two countries in the world have more 3G than 2G subscribers? This study examines the drivers behind 3G diffusion using linear probability models and qualitative choice (logit) analysis. Time series diffusion models show that diffusion patterns follow an s-curve pattern, favoring the Gompertz curve.
Highlights
In the late 1990s and early 2000s, many hailed the upcoming allocations of 3G spectrum as a revolutionizing step in telecommunications
As 3G penetration is a function of the time passed since 3G spectrum is allocated and 3G service is rolled out, regulators who awarded spectrum early relative to other countries have higher penetration rates
This study reveals that 3G penetration can be explained by the time that has passed since the deployment of the technology, mobile penetration rates, density, market concentration, the percentage of prepaid subscribers, and the size of the population
Summary
In the late 1990s and early 2000s, many hailed the upcoming allocations of 3G spectrum as a revolutionizing step in telecommunications. With 90 and 70 percent, respectively, Japan and South Korea are the only two countries in the world that currently have more 3G subscribers than 2G subscribers These two countries were among the first to introduce 3G services, and their 3G diffusion rates surpass the rates in the rest of the world. The cross-country comparison above clearly shows that several years have gone by since the allocation of 3G spectrum and the introduction of 3G services consumers still are hesitant in adopting the technology. This, in turn, raises the question of whether faster data upload and download speeds are necessarily better and whether consumers value accessing the Internet via their mobile phones It poses the question of what drives the demand for 3G handsets and services and whether regulatory intervention, such as mobile number portability (MNP), is an effective tool in promoting 3G take-up.
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