Market Structure Analysis (3) - Noppa

difficultmangledMobile - Wireless

Nov 12, 2013 (4 years and 1 month ago)

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___________________________________________________________

Voice

Tariff ($ PPP)

ARPU ($)

0,07

32

Voice

Tariff ($ PPP)

ARPU ($)

0,40

11

Systematic Assessment of Spectrum
Policy and Mobile Market Structure


Özkan

Demirbilek

Supervisor : Prof.
Heikki
Hämmäinen

MSc. in Communications Ecosystem

Comnet

Research Team


Instructor : Arturo
Basaure

Master’s Thesis Presentation

June 13, 2013


Agenda

o
Background

o
Research
Goals

o
Methods

o
Studied Mobile Markets

o
Market Analysis

o
Spectrum Policy

o
Market Structure

o
Results and
discussion

o
Conclusions

and Recommendation for Future Work


3

Background

Open Industry

Decentralized

Spectrum

Licensing

Policy

1.
Number

of
licenses

for
mobile
services

(<3)

2.
Level of
liberalization

of
usage

rights

3.
Service/ Technology
n
eutrality


Industry

Structure

Policy

1.
Switching

Costs

2.
NO/SO

separation

3.
MNP

and

SIM
-
locking

4.
Roaming

and

interworking

between

systems

5.
Unbundling

of

services


Source
:
Basaure

et al. (2012)

Research

Goals

o
Development of quantitative metrics
to
phase diagram for mobile telecom
regulations


o
Applying
the metrics to multiple mobile
markets


5

o
Literature review

o
Theoretical frameworks

o
Data collection on mobile markets

o
Data sources


Regulator, mobile operator and consultancy
company websites

o
Combination of theoretical frameworks with state
-
of
-
art
mobile market situation



6

Methods

Studied Mobile Markets

o
Spectrum
-
HHI

o
Market
-
based approaches
are the most common

o
Finland, only market with
symmetrical spectrum
distribution

o
Japan , China


only beauty
contests

o

Australia, USA, India


regional licenses






8

Spectrum Policy Analysis (1)

Spectrum

Policy

Analysis (2)




9

Reselling

Rights

Not

Available

Partly

Available

Available

Mobile Markets

Chile,
Turkey
,
India
,
Japan,

China

Finland

Sweden
, UK,

USA,
Australia, New
Zealand

o
Reselling Rights

o
Auctions


Effective spectrum allocation

o
Sustaining the efficiency over time?

o
Regulator intervention or re
-
assigning of spectrum by market forces?





o
Technology Neutrality
/ Harmonization

o
What is the driver? Let the market decide or coordinate the market?





Technology

Framework

Harmonization

Neutrality

(
regulator
),
Harmonization

(
market
)

Neutrality

Mobile Markets

Finland,
Turkey
, China*

Chile, New

Zealand
,
Australia,
Sweden
, UK

USA,

India
, Japan

Spectrum

Policy

Analysis
(3)


10

o
Market
-
HHI

o
China; incumbent 66%
market share

o
India very fragmented 13+
MNO

o
Sweden, UK, US, India
> 3
MNO

o
C
hile, just accepted two
more MNO






Mobile

Markets

Market HHI

China

4952

New Zealand

3883

Turkey

3839

Japan

3653

Chile

3608

Australia

3514

Finland

3346

Sweden

2951

United Kingdom

2610

United

States

2540

India

1360

Market
Structure

Analysis (1)

Existence

of
multinational

MNO

Yes

No

Mobil
e Markets

UK, US,
Turkey
,

New
Zealand
, Australia,
Finland,
Sweden
,
India
, Chile

China, Japan

11

o
Multinational MNOs

o
Foreign direct investment (FDI)

o
Managerial expertise and breaking protectionism

o
Macro
-
economic environment should be suitable for entry


PESTEL








o
Investment

o
Persistent level of investment based on

o
Technological innovation, spectrum fees and market development

o
Prices

o
One of the marketing mix element

o
Different pricing schemes available: flat, block, unit based








Market
Structure

Analysis
(2)

12

Mobile

Markets

Investments
/
Subscriptions

(

)

Japan

96

Australia

57

Chile

49.8

United
States

48.4

New
Zealand

35.08

Sweden


26.13

UK

23.9

Finland

23.8

China

20.2

Turkey

15.9

India

10.1








Mobile Markets

Mobile

Tariffs

Japan

0,81

Australia

0,64

New Zealand

0,55

Turkey

0,40

United Kingdom

0,31

Chile

0,29

United States

0,25

China

0,15

Sweden

0,08

Finland

0,07

India

0,06

Market
Structure

Analysis
(3)

13

o
ARPU

o
Tracking revenue growth

o
Market development in India


rural areas









Mobile

Markets

Monthly

ARPU

(
$
)

Japan

84

Australia

48

United

States

47


Finland

32

New

Zealand

21

Sweden

18

United

Kingdom

17

Chile

16
,
36

Turkey


11

China


9
.
82

India

1
.
6

Mobile

markets

Prepaid

Ratio

(
%
)

Finland

13


Chile

71


Sweden

31


Turkey

63


United

Kingdom

50


China

87


India

95


New

Zealand

66


Australia

38
,
3


United

States

25


Japan


2
,
0


o
Switching costs


o
Prepaid ratio

o
Mobile Number Portability

o
Except China, available in the rest






Market
Structure

Analysis
(4)

14

o
Churn rate

o
Closely linked to switching cost

o
Fluctates

based on dynamics

o
India the highest, Japan the least

o
Network Operator / Service
Operator Separation

o
Increased market competition

o
Hit and escape











Countries

Monthly

churn

rate

(
%
)

Finland

1
.
20

Chile

1
.
50

Sweden

1
.
10

Turkey

3
.
38

United

Kingdom

2
.
9

China

3
.
5


India

6

New

Zealand

0
.
83

Australia

1
.
8

United

States

1
.
10


Japan


0
.
62

NO

/ SO separation

Yes

No

Mobile

markets

Finland,

Sweden,

United

Kingdom,

New

Zealand,

Australia

Chile,

Turkey,

China,

India,

United

States,

Japan

Results

(1)

15

o
Spectrum policy explaining factor

o
Spectrum
-
HHI


o
Spectrum holdings in different bands possess differences

o
Reselling rights

o
Secondary trading markets not roll
-
out yet

o
Technology neutrality /harmonization

o
determines service offerings, influences market shares


o
S
pectrum has clear effect on competitiveness (
Lungborg
)




Market shares

o
The spectrum policy explaining factor is market
-
HHI









Results

(2)

16

Finland

Chile

Sweden

Turkey

UK

China

New Zealand

Australia

USA

Japan

India

0
1000
2000
3000
4000
5000
6000
0
500
1000
1500
2000
2500
3000
3500
4000
Market HHI

Spectrum HHI

Spectrum HHI vs. Market HHI

Finland
Chile
Sweden
Turkey
UK
UK
China
New Zealand
Australia
USA
Japan
India
Results

(3)

17

o
Market structure explaining factor

o
Prepaid subscriptions


lower switching costs, high churn rate











Finland

Chile

Sweden

Turkey

UK

China

India

New Zealand

Australia

USA

Japan

0
10
20
30
40
50
60
70
80
90
0
20
40
60
80
100
ARPU

Prepaid Ratio

Prepaid Ratio vs. Mobile ARPU

Finland
Chile
Sweden
Turkey
UK
China
India
New Zealand
Australia
USA
Results

(4)

I

18

o
ARPU
correlates with investment per subscriber








Finland

Chile

Sweden

Turkey

UK

China

India

New Zealand

Australia

USA

Japan

0
20
40
60
80
100
120
0
20
40
60
80
100
Investment


per Subscriber

Mobile ARPU

Mobile ARPU vs.
i
nvestments

per
subscriber

Finland
Chile
Sweden
Turkey
UK
China
India
New Zealand
Australia
USA
Japan
Results

(5)

19

o
Market Structure explaining factor

o
Industry unbundling framework


improve ( price/quality ) ratio

o
Vertically disintegrated


competition in retail


reduction in prices

o
Vertically integrated


High level of investment

o
Prices


Present situation in the industry

o
Investments


Future direction of the industry




Prices and Investments per Subscriber is the explaining factor









Results

(6)

20

Finland

Sweden

Turkey

UK

China

India

New Zealand

Australia

USA

Japan

0.01
0.10
1.00
10.00
2
3
4
5
6
7
8
Finland
Chile
Sweden
Turkey
UK
China
India
Spectrum policy

Market Structure

Conclusions

and
Recommendation

for
Future


21

o
Explaining factors:

o
Spectrum policy


market
-
HHI

o
Market structure


Prices and Investments per Subscribers

o
Highlights from the markets


o
The most open and decentralized market is India

o
The most closed industry is Japan

o
European markets are more open than American market

o
Recommendation for future research

o
Enhancing the database

o
Developing the theoretical framework










Thank you !

22

Questions
?