Two essays on the mobile telecommunications industry : number portability and double marginalization

Abstract

This dissertation is comprised of two essays on the mobile telecommunications industry. In the first essay on the demand for number portability in the Korean mobile telecommunications market, we used willingness to pay (WTP) to assess demand for number portability in the Korean mobile telecommunications market. The double-bounded dichotomous choice (DBDC) approach was used in the context of a contingent valuation method. Factor analysis was used to determine the principal components influencing WTP. A total of 1161 responses were obtained and a Chi-square ($\chi^2$) test was conducted. We adopted the econometric model proposed by Cameron and James(1987) and a log-transformed maximum likelihood method. WTP values for the mobile number portability of each mobile service provider were obtained and compared. We found evidence that a brand effect is likely to come into play when adopting number portability in the Korean mobile telecommunications industry. The effect is likely to have an adverse impact on the competitive climate in the industry. Finally, we make two regulatory proposals to help facilitate the introduction of mobile number portability to the Korean telecommunications market. The second essay is an applied econometric investigation on double marginalization problem: evidence from the Korean fixed to mobile service market. In the second essay, examination of the possibility of a ``double marginalization``problem existing in the Korean telecommunication industry is conducted and suggestions are made for the provision of a new scheme to eliminate this possibility by changing the pricing system for fixed-to-mobile calls. Based on five key economic characteristics in the Korean mobile market, a simple model for double marginalization in the telecommunication market is introduced. Evidence was found to suggest that a double marginalization problem is likely to exist within Korea``s telecommunication industry as it is presently structured, and that this pro...