What Caused the Smartphone Revolution?

Abstract

This paper examines the contribution of 3G and 4G cellular technologies to the smartphone revolution. It relies on quasi-natural experiments in which these technologies were launched at different times and deployed at different rates across countries while the availability of handsets, operating systems, and apps were similar. Using panel data regressions, we find that average smartphone connections per capita would have been at least 68 percent lower if the countries only had 2G cellular networks and average cellular data use would have been at least 41 percent lower if the countries had 3G coverage but did not have 4G coverage as of 2017. For the US, much of the adoption and online use of smartphones would not have occurred in the absence of 3G and 4G, leading to a substantial loss of consumer surplus. Other evidence indicates that Wi-Fi networks were not sufficient for the widespread adoption of smartphones, app development, or increased use of apps by consumers and that the development of major apps was an endogenous response to the deployment of advanced cellular technologies.