Determinants of Cellular Competition in Asia

Abstract

Using data from the International Telecommunications Union (ITU) Database I explore the market for the provision of cellular services in Asia. This study looks at the diffusion of mobile technologies and mobile tariffs over the last decade. It compares the degree of competition, regulation and its effects in Asia with mobile markets in developed countries. It also analyses a 29 country 10 year panel data set in order to study the determinants of mobile penetration in Asia. The results indicate that competition has played a major role in increasing the diffusion of cell phones. The presence of an independent telecommunication regulator as well as increasing capacity of fixed line telephone exchanges has also positively affected the diffusion of mobile services. The last part of the study takes a brief look at the cellular market in India, where mobile service provision has seen startling growth in the last decade. This growth has made for falling tariffs, increase in the number of firms and technologies and a large subscriber base which is still growing at a significant rate. The structure of competition is explored in some detail for regional markets using monthly data from 1997 to 2004.