The Impact of Mobile Phone Diffusion on the Fixed-Link Network

There is currently little knowledge on the consequences of diffusion of cellular technology on the incumbent fixed-link telephony service. We address this issue by estimation of diffusion curves for both technologies, allowing for potential cross-effects, using data from a small European economy. Our main findings are a negative effect of the mobile phone diffusion on the fixed-link telephony penetration rate. The effect is, roughly, a ten percent decrease in the fixed-link penetration rate (in comparison with the absence of mobile phones). No effect on the reverse direction seems to exist. Mobile phone market growth seems to be determined essentially by technological advances.