Impact of 3G and beyond technology development and pricing on mobile data service provisioning, usage and diffusion

This study investigates the third generation mobile telecommunication systems (3G) diffusion challenges in the situation where large-scale mobile data service usage has not yet broken through. The paper first analyzes incumbent mobile operator business prospects in a large Western-European country. The results suggest that rollout of the most advanced available 3G technologies pay back through increased data service usage and revenues in the situation of declining voice revenues. In the main body of the study we discuss different pricing models and demonstrate that the flat rate pricing of data services, supplemented with certain conditions, supports the large-scale take-up of mobile data services. It boosts the usage of mobile data services and provides a competitive and sustainable business model for the operators and other market actors at the same time. Our modeling indicates furthermore, that flat rate model, combined with open access, gives better incentives to rollout high-speed mobile technologies to the rural areas, than the traffic-based charging.