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A Demand Model for Mobile Data Traffic in the 5G Era: Case of Finland
Abstract
This chapter examines how to estimate and forecast the market demand of mobile data traffic in the 5G era. The research objective is to develop a demand model for forecasting the market price and quantity of traffic in the Finnish mobile data communications market for the period between 2016 and 2020. The market price of traffic unit (GB/month), quantity, revenue, and profits are empirically estimated and forecast. The results show that the improvements of network performance, reflected by the user experienced data rate, cause a drop in the price from 0.8 to 0.27 € per GB/month between 2016 and 2020 (tenfold traffic growth). Also, a more than threefold increase is shown in mobile data revenues, whereas the profitability remains at a high level for the minimum marginal cost of 0.08 €.
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