The Critical Mass of Wireless Communications: Differences between Developing and Developed Economies

The Critical Mass of Wireless Communications: Differences between Developing and Developed Economies

Kaisu Puumalainen (Lappeenranta University of Technology, Finland), Lauri Frank (University of Jyväskylä, Finland), Sanna Sundqvist (Lappeenranta University of Technology, Finland) and Anni Tuppura (Lappeenranta University of Technology, Finland)
Copyright: © 2012 |Pages: 18
DOI: 10.4018/978-1-61350-101-6.ch701

Abstract

The aim of this chapter is to identify and analyze the timing and level of critical mass in the development of market penetration for wireless communications. The authors assume that critical mass is fulfilled at the point when the acceleration of the diffusion process is at its maximum. In practice, this point is determined by estimating the diffusion function and calculating the second derivative with respect to time. The diffusion of mobile subscription is modelled using the Bass diffusion model. The penetration levels and points of time of critical mass of 209 countries or areas of the world are identified and subsequently subjected to regression analysis against population and economic characteristics. The findings suggest considerable differences between developing and developed countries.
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Background

Mobile telecommunication diffusion has been studied generally in a number of recent papers (Grajek and Kretschmer, 2009; Jang et al., 2005; Botelho and Pinto, 2004; Lim et al., 2003; Gruber 2001; Gruber and Verboven, 2001) but only a few of them focus on developing countries (e.g., Singh, 2008) or, especially, on comparing the diffusion in developed and developing countries (Rouvinen, 2006). However, there are some studies that report different patterns and types of use of mobile phones in low-income economies compared to high-income economies (e.g., Hahn and Kibora, 2008; James and Versteeg, 2007). Moreover, the magnitude of this innovation may be greater in geographic areas,where the fixed telephone provision has a very limited presence or is technically unreliable (Hahn and Kibora, 2008). Thus, the diffusion of mobile telecommunications may exhibit very different features in the least developed or developing countries compared to developed countries.

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