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Wireless Technologies: Shifting into the Next Gear?
Abstract
Mobile Operators (MOs) in several countries are constantly challenged with the urge to further enhance the quality of their existing wireless networks, often dictated by the need to meet the newest technological standards as progress in wireless technologies is made. While the pressure to upgrade wireless networks is constantly felt by MOs in this market, it is not uncommon to observe some MOs upgrading their networks earlier than others. This article provides a theoretical explanation for this apparent paradox of why some MOs postpone the upgrading while others do not. It is shown that in the presence of different types of users - conservative versus quality-seeking - MOs may find it more profitable to adopt asymmetric upgrading strategies. Furthermore, it is argued that the incentives by some MOs not to upgrade are the largest when the share of conservative users in the market is sufficiently high, relative to the additional cost that upgrading entails. In such a case the MOs that do not upgrade their networks enjoy higher profits than the ones that do so.
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