Switching Costs in Mobile Telephony: Evidence for the Mexican Case

This article identifies and calculates switching costs and network effects between the two leading mobile operators in Mexico: Telcel and Movistar. In order to do this, the model created by Suleymanova & Wey (2008) was calibrated, and additional evidence is presented. The study finds that switching costs are more relevant than network effects, which generates a fat-cat effect. These costs have declined over time but remain high, inhibiting competition. The costs are asymmetrical, as Telcel users face higher costs. The relevant switching costs are the ones derived from search and comparison of information, and those created by the network effects through tariffs.