Consumer Preferences for Improvements in Mobile Telecommunication Services
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This study evaluates consumers’ willingness to pay for improvements in mobile services, focusing on 4G upgrades and roaming services. The results indicate that people value unrestrained roaming services the most. Increased speed and unlimited use attributes are next, and are similarly significant at the 1% level.
Consumer Preferences for Improvements in Mobile Telecommunication Services
Added on 2022-10-10
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1
Consumer Preferences for Improvements in Mobile
Telecommunication Services
Orhan Dagli
Eastern Mediterranean University, North Cyprus
E-mail: orhan.dagli@dagli.com
Tel.: + 90 533 865 5005
Fax: + 90 392 365 5901
Glenn P. Jenkins
Queen’s University, Canada,
and Eastern Mediterranean University, North Cyprus
Corresponding author
E-mail: jenkins@econ.queensu.ca
Tel: +905338683760
Development Discussion Paper: 2015-05
ABSTRACT
We employ a choice experiment in order to estimate consumers’ willingness to pay for
improvements in mobile services, focusing on 4G upgrades and roaming services. The
attributes of an improved mobile service that we investigate in our experiment are: increased
mobile internet speed (possible with 4G), unlimited mobile internet use, improved quality
(possible with 4G) and unrestrained use in two neighbouring countries (unrestrained
roaming). The results indicate that people value unrestrained roaming services the most.
Increased speed and unlimited use attributes are next, and are similarly significant at the 1%
level. The impact of improved quality is statistically insignificant at the 5% level, suggesting
that consumers are content with the current level of quality they receive with 3G. We
conclude that bilateral roaming regulation between governments is more valuable than 4G
investments.
Revised paper published as: Dagli, O., & Jenkins, G. P. (2016). Consumer preferences for improvements in
mobile telecommunication services. Telematics and Informatics, 33(1), 205-216.
Keywords: Mobile telecommunication services; choice experiment; willingness to pay;
consumer preferences; 4G; roaming
JEL classification: C5, D12, L96
Consumer Preferences for Improvements in Mobile
Telecommunication Services
Orhan Dagli
Eastern Mediterranean University, North Cyprus
E-mail: orhan.dagli@dagli.com
Tel.: + 90 533 865 5005
Fax: + 90 392 365 5901
Glenn P. Jenkins
Queen’s University, Canada,
and Eastern Mediterranean University, North Cyprus
Corresponding author
E-mail: jenkins@econ.queensu.ca
Tel: +905338683760
Development Discussion Paper: 2015-05
ABSTRACT
We employ a choice experiment in order to estimate consumers’ willingness to pay for
improvements in mobile services, focusing on 4G upgrades and roaming services. The
attributes of an improved mobile service that we investigate in our experiment are: increased
mobile internet speed (possible with 4G), unlimited mobile internet use, improved quality
(possible with 4G) and unrestrained use in two neighbouring countries (unrestrained
roaming). The results indicate that people value unrestrained roaming services the most.
Increased speed and unlimited use attributes are next, and are similarly significant at the 1%
level. The impact of improved quality is statistically insignificant at the 5% level, suggesting
that consumers are content with the current level of quality they receive with 3G. We
conclude that bilateral roaming regulation between governments is more valuable than 4G
investments.
Revised paper published as: Dagli, O., & Jenkins, G. P. (2016). Consumer preferences for improvements in
mobile telecommunication services. Telematics and Informatics, 33(1), 205-216.
Keywords: Mobile telecommunication services; choice experiment; willingness to pay;
consumer preferences; 4G; roaming
JEL classification: C5, D12, L96
2
Research highlights:
We model the utility consumers derive from improvements in mobile services.
We estimate the marginal willingness-to-pay for each improvement.
Consumers will pay 2% of their average monthly income for unrestrained roaming.
Consumers will pay for improved data rates, but not for improved quality.
Consumers are indifferent between a 30 Mbps 4G service and a 300 Mbps 4G service.
1. Introduction
Advances in telecommunications have turned the world into a more connected, more
̳globalized‘ place in the 20th century, and have been a major contributor to increased economic
efficiency and productivity in every possible sector. Technological progress in
telecommunications continues to change the way we live our lives in the 21st century.
Mobile communications (MC) has been the star of telecommunications in the past two
decades. Initially MC was a means for speaking and texting over mobile phones using 1G and
later GSM (2G) technologies. The introduction of 3G enabled mobile users to connect to the
internet and to send and receive various multimedia messages. Then 4G arrived, making it
possible to access mobile internet with speeds that even some fixed broadband technologies
cannot achieve. The International Mobile Telecommunications Advanced specification sets the
peak speed requirements for 4G service at 100 Mbps for high mobility communication and
1 Gbps for low mobility communication (ITU, 2008). Commercial 4G networks have not yet
achieved the peak speeds of the specification, although they have spread rapidly around the world
since the early 2010s. As of November 2014, there are 331 4G LTE networks offering varying
data connection speeds, deployed in 112 countries. The top speeds available are offered by 21
commercial 4G LTE-A CA networks launched in 14 countries, subscribers of which enjoy
downlink data speeds ranging from 225 Mbps to 300 Mbps (Ericsson, 2014).
Research highlights:
We model the utility consumers derive from improvements in mobile services.
We estimate the marginal willingness-to-pay for each improvement.
Consumers will pay 2% of their average monthly income for unrestrained roaming.
Consumers will pay for improved data rates, but not for improved quality.
Consumers are indifferent between a 30 Mbps 4G service and a 300 Mbps 4G service.
1. Introduction
Advances in telecommunications have turned the world into a more connected, more
̳globalized‘ place in the 20th century, and have been a major contributor to increased economic
efficiency and productivity in every possible sector. Technological progress in
telecommunications continues to change the way we live our lives in the 21st century.
Mobile communications (MC) has been the star of telecommunications in the past two
decades. Initially MC was a means for speaking and texting over mobile phones using 1G and
later GSM (2G) technologies. The introduction of 3G enabled mobile users to connect to the
internet and to send and receive various multimedia messages. Then 4G arrived, making it
possible to access mobile internet with speeds that even some fixed broadband technologies
cannot achieve. The International Mobile Telecommunications Advanced specification sets the
peak speed requirements for 4G service at 100 Mbps for high mobility communication and
1 Gbps for low mobility communication (ITU, 2008). Commercial 4G networks have not yet
achieved the peak speeds of the specification, although they have spread rapidly around the world
since the early 2010s. As of November 2014, there are 331 4G LTE networks offering varying
data connection speeds, deployed in 112 countries. The top speeds available are offered by 21
commercial 4G LTE-A CA networks launched in 14 countries, subscribers of which enjoy
downlink data speeds ranging from 225 Mbps to 300 Mbps (Ericsson, 2014).
3
Numerous prior studies have focused on the MC sector. However, rapidly changing
technologies continue to open up new territories for academic and empirical research. Previous
literature has touched on MC licensing and auctions (Klemperer, 2002; Fuentelsaz et al., 2008),
mobile tariff discrimination (Haucap and Heimeshoff, 2011), mobile roaming (Fabrizi and
Wertlen, 2008; Stühmeier, 2012), MC adoption (Rice and Katz, 2003; Pagani, 2004; Bouwman et
al., 2007), and consumer preferences for MC services (Kim, 2005; Shin et al., 2011; Kwak and
Yoo, 2012; Klein and Jakopin, 2014). This paper presents a brand-new study on the last of the
subject areas in this list.
We employ a choice experiment (CE) in order to estimate consumer preferences for a
selection of ̳current and crucial‘ improvements in MC services. The attributes we evaluate are:
increased mobile internet speed, unlimited mobile internet use, improved quality of
communications service, and unrestrained use abroad. These service upgrades are missing in
most mobile markets around the world, and each one is of interest for a reason.
Although 4G is deployed in many countries, there are still many regions that are not
covered, and many more that are covered but lagging behind in terms of 4G technology.
Consumers of mobile services in these regions have yet to fully benefit from the features of 4G,
namely increased mobile internet speed and improved quality. Therefore, understanding the value
of introducing these features continues to be of interest. Unlimited mobile internet use is
interesting because most mobile broadband services on offer have data caps, whereas fixed
broadband services generally provide unlimited use. Mobile broadband could become a
competitor of fixed broadband if offered with unlimited use, so we aim to quantify the value that
consumers associate with this attribute. Finally, unrestrained use abroad is of interest because
people are travelling more than ever, and operators are charging excessively for roaming mobile
services. The EU has taken steps to regulate its roaming market (Salsas and Koboldt, 2004;
Shortall, 2010; Infante and Vallejo, 2012), and recently independent countries have started to
Numerous prior studies have focused on the MC sector. However, rapidly changing
technologies continue to open up new territories for academic and empirical research. Previous
literature has touched on MC licensing and auctions (Klemperer, 2002; Fuentelsaz et al., 2008),
mobile tariff discrimination (Haucap and Heimeshoff, 2011), mobile roaming (Fabrizi and
Wertlen, 2008; Stühmeier, 2012), MC adoption (Rice and Katz, 2003; Pagani, 2004; Bouwman et
al., 2007), and consumer preferences for MC services (Kim, 2005; Shin et al., 2011; Kwak and
Yoo, 2012; Klein and Jakopin, 2014). This paper presents a brand-new study on the last of the
subject areas in this list.
We employ a choice experiment (CE) in order to estimate consumer preferences for a
selection of ̳current and crucial‘ improvements in MC services. The attributes we evaluate are:
increased mobile internet speed, unlimited mobile internet use, improved quality of
communications service, and unrestrained use abroad. These service upgrades are missing in
most mobile markets around the world, and each one is of interest for a reason.
Although 4G is deployed in many countries, there are still many regions that are not
covered, and many more that are covered but lagging behind in terms of 4G technology.
Consumers of mobile services in these regions have yet to fully benefit from the features of 4G,
namely increased mobile internet speed and improved quality. Therefore, understanding the value
of introducing these features continues to be of interest. Unlimited mobile internet use is
interesting because most mobile broadband services on offer have data caps, whereas fixed
broadband services generally provide unlimited use. Mobile broadband could become a
competitor of fixed broadband if offered with unlimited use, so we aim to quantify the value that
consumers associate with this attribute. Finally, unrestrained use abroad is of interest because
people are travelling more than ever, and operators are charging excessively for roaming mobile
services. The EU has taken steps to regulate its roaming market (Salsas and Koboldt, 2004;
Shortall, 2010; Infante and Vallejo, 2012), and recently independent countries have started to
4
make bilateral agreements for coordinated action on roaming services (Singapore and Malaysia in
2011 (The Independent, 2011), Australia and New Zealand in 2013 (MBIE, 2013)). We might
expect to see more countries follow suit in the near future, if the value for the consumers is
depicted more clearly.
Our aim in this study is to evaluate consumers‘ willingness to pay (WTP) for the
abovementioned attributes, as a measure of their value. We conduct 320 face-to-face interviews
with people from all regions of North Cyprus, asking respondents to choose between their
existing mobile service and two other hypothetical alternatives with varying attribute levels. We
estimate consumers‘ marginal WTP (MWTP) for each attribute by analysing how they trade off
between price and other attributes when making their choices.
North Cyprus is a developing economy in the Eastern Mediterranean with a population
slightly below 300,000. Mobile use is spread widely throughout the country and the currently
available mobile technology is 3G. The results of this study are useful for the government of
North Cyprus in designing a possible auction or tender for 4G licensing, and for mobile network
operators in analysing the costs and benefits of future 4G investment. Similarly, these results
should be of interest for all developing countries, and especially for Turkey, the 20th largest
mobile market in the world in terms of number of subscribers in 2013 (ITU, 2015). Like North
Cyprus, Turkey has not yet introduced 4G, and the same operators dominate both the Turkish
market and the market in North Cyprus (Turkcell and Vodafone).
The paper is organized as follows. Section 2 reviews the previous research in this area and
section 3 explains the methodology used in the study. Section 4 defines the model to be
estimated and the estimation results are presented in section 5. Finally, section 6 discusses the
results and concludes.
make bilateral agreements for coordinated action on roaming services (Singapore and Malaysia in
2011 (The Independent, 2011), Australia and New Zealand in 2013 (MBIE, 2013)). We might
expect to see more countries follow suit in the near future, if the value for the consumers is
depicted more clearly.
Our aim in this study is to evaluate consumers‘ willingness to pay (WTP) for the
abovementioned attributes, as a measure of their value. We conduct 320 face-to-face interviews
with people from all regions of North Cyprus, asking respondents to choose between their
existing mobile service and two other hypothetical alternatives with varying attribute levels. We
estimate consumers‘ marginal WTP (MWTP) for each attribute by analysing how they trade off
between price and other attributes when making their choices.
North Cyprus is a developing economy in the Eastern Mediterranean with a population
slightly below 300,000. Mobile use is spread widely throughout the country and the currently
available mobile technology is 3G. The results of this study are useful for the government of
North Cyprus in designing a possible auction or tender for 4G licensing, and for mobile network
operators in analysing the costs and benefits of future 4G investment. Similarly, these results
should be of interest for all developing countries, and especially for Turkey, the 20th largest
mobile market in the world in terms of number of subscribers in 2013 (ITU, 2015). Like North
Cyprus, Turkey has not yet introduced 4G, and the same operators dominate both the Turkish
market and the market in North Cyprus (Turkcell and Vodafone).
The paper is organized as follows. Section 2 reviews the previous research in this area and
section 3 explains the methodology used in the study. Section 4 defines the model to be
estimated and the estimation results are presented in section 5. Finally, section 6 discusses the
results and concludes.
5
2. Background
Estimating consumer preferences for the attributes of telecommunications services has
been a topic of interest among researchers since the advent of broadband internet in the 1990s.
Earlier studies focused on fixed broadband services, while the focus has shifted towards mobile
services since the 2010s as mobile technologies have caught up and overtaken fixed technologies.
A number of notable stated preference studies that estimate consumers‘ valuations for telecom
services and their attributes have been completed to date.
2.1 Consumer studies for fixed broadband services
Madden and Simpson (1997) were among the first to carry out research in this area. They
used data obtained from a national survey of households in Australia in order to determine the
willingness of households to subscribe to a broadband network. The fact that broadband services
were not currently available at that time was a complication for their study. Out of 1,010
households surveyed, 598 provided usable data. The authors employed maximum likelihood
estimation for a logit model, and found that the effects of the installation fee and income on the
probability of subscription were statistically significant, whereas the effect of monthly fee was
not. Other determinants for the probability of subscription were the size of the household, the
age of the household head and whether the head was employed in a blue-collar occupation.
Ida and Kuroda (2006) studied the Japanese market for broadband services such as
ADSL, CATV (cable television internet) and FTTH (fibre to the home). They employed a
discrete choice analysis with a nested logit model on a data set of 1,013 observations. They
showed that a nested choice structure of narrowband (dial-up, ISDN) versus broadband (ADSL,
CATV, FTTH) is the best model fit because of the sign conditions of price and speed variables,
their statistical significance and degrees of fitness. They also showed that the own-price elasticity
of ADSL is inelastic, while the figures for CATV and FTTH are elastic, concluding that the
ADSL market is independent of other services.
2. Background
Estimating consumer preferences for the attributes of telecommunications services has
been a topic of interest among researchers since the advent of broadband internet in the 1990s.
Earlier studies focused on fixed broadband services, while the focus has shifted towards mobile
services since the 2010s as mobile technologies have caught up and overtaken fixed technologies.
A number of notable stated preference studies that estimate consumers‘ valuations for telecom
services and their attributes have been completed to date.
2.1 Consumer studies for fixed broadband services
Madden and Simpson (1997) were among the first to carry out research in this area. They
used data obtained from a national survey of households in Australia in order to determine the
willingness of households to subscribe to a broadband network. The fact that broadband services
were not currently available at that time was a complication for their study. Out of 1,010
households surveyed, 598 provided usable data. The authors employed maximum likelihood
estimation for a logit model, and found that the effects of the installation fee and income on the
probability of subscription were statistically significant, whereas the effect of monthly fee was
not. Other determinants for the probability of subscription were the size of the household, the
age of the household head and whether the head was employed in a blue-collar occupation.
Ida and Kuroda (2006) studied the Japanese market for broadband services such as
ADSL, CATV (cable television internet) and FTTH (fibre to the home). They employed a
discrete choice analysis with a nested logit model on a data set of 1,013 observations. They
showed that a nested choice structure of narrowband (dial-up, ISDN) versus broadband (ADSL,
CATV, FTTH) is the best model fit because of the sign conditions of price and speed variables,
their statistical significance and degrees of fitness. They also showed that the own-price elasticity
of ADSL is inelastic, while the figures for CATV and FTTH are elastic, concluding that the
ADSL market is independent of other services.
6
Rosston et al. (2010) produced the most comprehensive CE study on the broadband
internet market in the USA, and for the first time introduced the effects of attributes. The
authors employed discrete choice analysis to estimate the marginal WTP for improvements in
eight internet service characteristics: cost, reliability, speed, laptop mobility, movie rental, priority,
telehealth and videophone. The data was from a nationwide survey conducted with 6,271
respondents in late 2009 and early 2010. The results implied that reliability and speed were
important characteristics of internet service. Estimated MWTPs were 20 USD per month for
more reliable service, 45 USD for an improvement in speed from slow to fast, and 48 USD for
an improvement in speed from slow to very fast. MWTPs for the other attributes were 6 USD or
less. Valuations for broadband internet were larger for experienced households, and there was an
estimated two- to three-fold increase in consumer surplus between 2003, when a similar study
was conducted, and 2010.
Carare et al. (2015) focused on measuring the WTP for broadband of non-adopters in the
USA. They reported that 28% of American households did not have a broadband subscription as
of October 2012, and set out to identify the determinants of broadband adoption. The study used
a survey of 15,082 households conducted in 2011. Approximately two thirds of the respondents
stated that they would not consider subscribing at any price, for reasons such as a lack of skills or
a lack of a computer or other device. The authors found that, conditional on the available
household characteristics, including education and the presence of children, the likelihood of
broadband adoption increased with higher levels of income.
2.2 Consumer studies for mobile broadband services
The term ̳mobile broadband‘ was born with the advent of 3G technology in the 2000s.
Since then, there have been a number of empirical studies evaluating consumer preferences for
mobile broadband services, both 3G and 4G, and for related attributes.
Rosston et al. (2010) produced the most comprehensive CE study on the broadband
internet market in the USA, and for the first time introduced the effects of attributes. The
authors employed discrete choice analysis to estimate the marginal WTP for improvements in
eight internet service characteristics: cost, reliability, speed, laptop mobility, movie rental, priority,
telehealth and videophone. The data was from a nationwide survey conducted with 6,271
respondents in late 2009 and early 2010. The results implied that reliability and speed were
important characteristics of internet service. Estimated MWTPs were 20 USD per month for
more reliable service, 45 USD for an improvement in speed from slow to fast, and 48 USD for
an improvement in speed from slow to very fast. MWTPs for the other attributes were 6 USD or
less. Valuations for broadband internet were larger for experienced households, and there was an
estimated two- to three-fold increase in consumer surplus between 2003, when a similar study
was conducted, and 2010.
Carare et al. (2015) focused on measuring the WTP for broadband of non-adopters in the
USA. They reported that 28% of American households did not have a broadband subscription as
of October 2012, and set out to identify the determinants of broadband adoption. The study used
a survey of 15,082 households conducted in 2011. Approximately two thirds of the respondents
stated that they would not consider subscribing at any price, for reasons such as a lack of skills or
a lack of a computer or other device. The authors found that, conditional on the available
household characteristics, including education and the presence of children, the likelihood of
broadband adoption increased with higher levels of income.
2.2 Consumer studies for mobile broadband services
The term ̳mobile broadband‘ was born with the advent of 3G technology in the 2000s.
Since then, there have been a number of empirical studies evaluating consumer preferences for
mobile broadband services, both 3G and 4G, and for related attributes.
7
Kim (2005) estimated consumer preferences for IMT-2000 (3G) services, focusing on
service upgrades including video telephony, global roaming and multimedia mobile internet
applications. Using a survey of 250 respondents from Seoul, South Korea, Kim found large
variations in consumer valuation of 3G service upgrades. The results indicated that consumers
place a higher value on video telephony than on multimedia mobile internet and global roaming
services.
Shin et al. (2011) carried out a similar conjoint analysis for mobile service consumption in
Uzbekistan. Their primary aim was to identify the demand for mobile number portability (MNP),
which refers to consumers‘ right to keep their mobile numbers while switching between mobile
service providers. Other attributes estimated in the study were price, call and service quality,
discount calls within the same network, and the mobile network operator company. Using 115
responses for their survey, the authors found that price and quality were the most valuable
attributes, while subscribers did not consider MNP to be an important service upgrade.
The first study evaluating consumers‘ preferences for 4G technology was by Kwak and
Yoo (2012). It involved 500 person-to-person interviews held in Seoul, South Korea, in which a
CE was used in order to evaluate the MWTP for the following 4G attributes: data rates, quality of
communications service, number of broadcasting channels, video-on-demand (VOD) service and
supplementary services. The authors found that ―consumers were interested in 4G and were quite
prepared to pay for 4G services‖. Estimated per-month figures for MWTP were 4.03 USD for
improved communication service, 0.06 USD for an additional broadcasting channel, 1.75 USD
for VOD and 1.45 USD for supplementary services.
Klein and Jakopin (2014) took a different approach in their conjoint analysis study,
attempting to investigate bundling of mobile telecommunication services. As mobile use has
spread and competition in the mobile sector has intensified, mobile operators have aimed to gain
competitive edge by bundling services together, including, but not limited to, minutes for talking,
Kim (2005) estimated consumer preferences for IMT-2000 (3G) services, focusing on
service upgrades including video telephony, global roaming and multimedia mobile internet
applications. Using a survey of 250 respondents from Seoul, South Korea, Kim found large
variations in consumer valuation of 3G service upgrades. The results indicated that consumers
place a higher value on video telephony than on multimedia mobile internet and global roaming
services.
Shin et al. (2011) carried out a similar conjoint analysis for mobile service consumption in
Uzbekistan. Their primary aim was to identify the demand for mobile number portability (MNP),
which refers to consumers‘ right to keep their mobile numbers while switching between mobile
service providers. Other attributes estimated in the study were price, call and service quality,
discount calls within the same network, and the mobile network operator company. Using 115
responses for their survey, the authors found that price and quality were the most valuable
attributes, while subscribers did not consider MNP to be an important service upgrade.
The first study evaluating consumers‘ preferences for 4G technology was by Kwak and
Yoo (2012). It involved 500 person-to-person interviews held in Seoul, South Korea, in which a
CE was used in order to evaluate the MWTP for the following 4G attributes: data rates, quality of
communications service, number of broadcasting channels, video-on-demand (VOD) service and
supplementary services. The authors found that ―consumers were interested in 4G and were quite
prepared to pay for 4G services‖. Estimated per-month figures for MWTP were 4.03 USD for
improved communication service, 0.06 USD for an additional broadcasting channel, 1.75 USD
for VOD and 1.45 USD for supplementary services.
Klein and Jakopin (2014) took a different approach in their conjoint analysis study,
attempting to investigate bundling of mobile telecommunication services. As mobile use has
spread and competition in the mobile sector has intensified, mobile operators have aimed to gain
competitive edge by bundling services together, including, but not limited to, minutes for talking,
8
text messaging, internet access, and even financing for a mobile device. The authors collected
data via an online survey among German consumers, and carried out their analysis using 116
responses out of a total of 355 surveyed. The results indicated that pricing was the most
important attribute in a service bundle, followed by minutes included and internet access. Text
messaging was calculated to be the least important attribute. To account for the accuracy of the
estimated WTP figures, both linear calculation and curve fitting were conducted for the price
parameter, with no significant change in results.
The current study is the first to estimate the importance to consumers of being able to
use their local mobile package while travelling abroad (unrestrained roaming, in short). An
increasing number of people around the world have travelling routines, and unrestrained roaming
can be achieved through regulation. Furthermore, this study is an update on the consumer studies
evaluating 4G, as we include in our attribute list the top data rates currently available with the
most advanced 4G technologies. This will shed light on the extent of the consumer demand for
ever-faster mobile data rates.
3. Methodology
3.1 Choice experiments
The origins of the CE methodology date back to Louis L. Thurstone‘s 1927 paper on
paired (comparison) CEs. Many authors have contributed to the literature on choice analysis, and
the final version of the CE methodology draws upon Lancaster‘s economic theory of value
(Lancaster, 1966) and random utility theory (McFadden, 1973; Hanemann, 1984). CE is now
commonly used in various fields of economics and marketing to make choice-based valuations of
goods, services and their attributes.
What sets CE apart from other stated preference elicitation methods is that it allows
researchers to study not only the value of a commodity itself, but also the values of various
attributes of this commodity. These attributes are the main factors influencing people‘s decisions,
text messaging, internet access, and even financing for a mobile device. The authors collected
data via an online survey among German consumers, and carried out their analysis using 116
responses out of a total of 355 surveyed. The results indicated that pricing was the most
important attribute in a service bundle, followed by minutes included and internet access. Text
messaging was calculated to be the least important attribute. To account for the accuracy of the
estimated WTP figures, both linear calculation and curve fitting were conducted for the price
parameter, with no significant change in results.
The current study is the first to estimate the importance to consumers of being able to
use their local mobile package while travelling abroad (unrestrained roaming, in short). An
increasing number of people around the world have travelling routines, and unrestrained roaming
can be achieved through regulation. Furthermore, this study is an update on the consumer studies
evaluating 4G, as we include in our attribute list the top data rates currently available with the
most advanced 4G technologies. This will shed light on the extent of the consumer demand for
ever-faster mobile data rates.
3. Methodology
3.1 Choice experiments
The origins of the CE methodology date back to Louis L. Thurstone‘s 1927 paper on
paired (comparison) CEs. Many authors have contributed to the literature on choice analysis, and
the final version of the CE methodology draws upon Lancaster‘s economic theory of value
(Lancaster, 1966) and random utility theory (McFadden, 1973; Hanemann, 1984). CE is now
commonly used in various fields of economics and marketing to make choice-based valuations of
goods, services and their attributes.
What sets CE apart from other stated preference elicitation methods is that it allows
researchers to study not only the value of a commodity itself, but also the values of various
attributes of this commodity. These attributes are the main factors influencing people‘s decisions,
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