Competition and Innovation in Telecom Sector: Empirical Evidence from OECD Countries

The paper aims to analyze the effect of competition and innovation in OECD next-generation mobile phones (as a proxy for telecom sector) by examining factors affecting the diffusion pattern. A rigorous econometric model is estimated using the mobile telecommunications panel dataset comprised with the 19 OECD countries where at least 80% data are covered. The econometric model categorizes the variables as: (1) GDP per capita income and mobile user cost, (2) competition policies (3) telecom infrastructure (4) technological innovations (5) others such as role of MVNO (mobile virtual network operators), multiple standards for 3G as for the appropriateness of the outcome. The study represents country specific influence in terms of mobile contents and technological innovations. A new and important empirical finding is that there are still many opportunities available for mobile network operators (MNO) in this region by providing better telecom infrastructure to support technological innovations and to upheaval decreasing trend of average revenue per user (ARPU). Besides, the most important factors are identified as high speeds and necessary time require for porting mobile number.