Abstract
This dissertation studies the contribution of switching costs and network effects to consumer lock-in in mobile telephony in Mauritius, a country with termination-based discriminatory tariffs and where mobile number portability is not yet available. It applies a discrete choice experiment as a preference elicitation method for the modelling of subscription decision using a representative sample of 404 mobile phone users in Mauritius. Data was collected through a drop-off survey. Each respondent completed five choice tasks, each with four choices and a "status quo" alternative, as part of the experimental design. Six characteristics were used to describe each alternative: brand preference, mobile number portability preference, calling club network effects, and price elasticity of choice probabilities of on-net calls, off-net calls and daily mobile data package. In total, 2020 choice observations are noted. The sample is representative with respect to the gender distribution and geographical spread of the population in Mauritius. The results identify statistically significant effect of a status-quo bias in switching decision, brand preference, mobile number portability preference, calling club network effects, and price elasticity of choice probabilities of on-net calls, off-net calls and daily mobile data package. The price elasticity of choice probabilities of on-net calls is elastic, while that of off-net calls and daily mobile data usage are both inelastic. On willingness to pay for the described features, the results show that an average user is estimated to be willing to pay Rs 422 (approximately $9.2) per annum not to have to switch mobile network operator and is estimated to be willing to pay Rs 978 (approximately $21.4) per annum more to be part of a larger network. Moreover, based on the sample, it is estimated that mobile telephone users in Mauritius, as a whole, are willing to pay Rs 387,221,384 (approximately $8,500,000) per annum to introduce mobile number portability. The implications of these results for regulatory policy are discussed.
Keywords: Lock-in Effects; Mobile Number Portability; Network Effects; Switching Costs.