In a report on worldwide trends in mobile usage, Wireless Intelligence investigates the relationship between decreased prices of call times and the related increase in mobile usage around the world over the last decade. “Analysis: How Pricing Dynamics Affect Mobile Usage” looks at both developed and developing countries to see where call prices have changed most dramatically in the last ten years, and how those changes have affected call times and mobile usage. Although the full report is restricted to Wireless Intelligence members, some of the key data is summarized below.
Calum Dewar, an analyst for Wireless Intelligence (a database of information on mobile markets and worldwide operators), writes that since 2001 mobile usage has grown twice as fast as the number of worldwide mobile connections, as “total global mobile voice minutes reached an estimated 1.6 trillion in 2010,” while mobile connections increased from 950 million in 2001 to 5.4 billion. The explanation for this jump in voice minutes/call times is given that the price of per minute calling dropped by three quarters during that same time period.
The study breaks down worldwide mobile markets into four different categories: low-cost, high-usage markets; high-cost, high-usage markets; high-cost, low-usage markets; and low-cost, low-usage markets. The USA and China fall into the low-cost, high-usage category, Japan, Australia, and Taiwan fall into the high-cost, low-usage category, and much of Africa, Eastern Europe, and the Middle East fall into the low-cost, low-usage category.
Examining price and usage correlation over a ten-year period, Dewar writes that the biggest factors in the lower prices/higher mobile use trend are:
- The growth of network connections Since 2001, the number of people within areas of network coverage has grown to cover 90 percent of the world’s population. Dewar writes, ‘It is generally accepted that as the number of connections in a network grows, the actual level of activity between those connections will grow at a faster rate.”
- Increased competition among network operators Dewar writes that “There is now a total of more than 800 operators across 224 countries (or a global average of four operators per market), an increase of more than 40 percent since 2001.” The sheer number of operators competing for customers has contributed to lower consumer prices.
- New pricing strategies and promotions among network operators Some users have been swayed to mobile use through the use of promotions like give-aways and sweepstakes; using inventive promotional strategies and advertising made mobile use more commonly acceptable during the early 2000s.
- The rise of mobile connections over fixed landlines The use of mobiles has increased as some users have moved to using only a mobile phone and cutting fixed landline connections completely.
The study breaks down the effects of price and call time; Dewar writes, “… at the global level, every one US cent decrease in EPPM [effective price per minute] results in an average increase of 5.6 minutes calling time per month for every mobile user in the world. The equivalent MoU [minutes per user per month] increase for the developed and developing world are 6.9 and 13.5 minutes respectively, meaning that on average mobile users in the developing world are almost twice as prince sensitive as those in the developed world.”
- The report is a good look at how multiple factors have contributed to the rise of mobile usage; lower prices lead to more customers, which in turn lead to increased operator competition and subsequently more customers. Over the last ten years, this cycle has lead to an increase in both total global voice minutes/call times, and an increased number of worldwide mobile connections.
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