Propagating a digital divide: Diffusion of mobile telecommunication services in Pakistan

Abstract

The mobile telecommunication sector in developing countries has attracted significant attention and investments in recent years. Two primary reasons, however, necessitate the adoption of new methods to manage mobile diffusion in these countries. First, the economic and social impacts involved are more pronounced there. Second, low institutional capacity limits efficient regulation and strategy development. Therefore, the consequence is a widening of the intra-country digital divide in countries like Pakistan. This paper embraces both an estimation component and a policy scenario component. We call attention to the importance of estimating the number of unique mobile subscribers to gauge the intensity of the digital divide within a country. We also demonstrate how the system dynamics approach offers advantages over purely statistical estimation models in that it enables dynamic exploratory policy assessments by the telecommunication companies and relevant government agencies. Further a system dynamics model can be embedded within an interface which allows easier model use by those not familiar with the methodology or the software employed. This allows dissemination of an effective policymaking aid despite low institutional capacity. Employing the system dynamics methodology, we estimate the rate of diffusion, identify its major determinants and the true market size in the case of Pakistan. This research can be useful for policymaking and business strategy development in, but not limited to, the mobile telecommunication sector in developing countries.