Pricing strategies and competition in the mobile broadband market

Abstract

This paper analyzes mobile broadband plan prices in 37 countries between 2011 and 2014. Mobile network operators typically commercialize usage-based plans that include an access fee, a usage allowance (number of GB included in the tariff plan), and a penalty system should consumers exceed the contracted allowance. Our empirical model shows that the prices of these plans are lower than those of unlimited contracts, and that they depend on the type of penalty that is used. The prices also reflect service characteristics, including the technology provided, the download speed, and telephone call allowances. Plans that bundle mobile broadband plans with smartphone devices have longer contract duration and may be more expensive than plans that only include a SIM card. Specifically, broadband service plans are priced higher when they include an iPhone or a Samsung smartphone. The paper also discusses the impact of market structure and entry regulation on prices.