The Need for Market Oriented Policies
Market segmentation is an obvious concept for wireless service providers. Its importance is further emphasized in today’s networked society. Currently, many telecommunication service providers cater to a much broader market than the one they had initially targeted. For example, twenty years ago, expensive handset and service charges led to the adoption of wireless services by mostly high-income individuals. In today’s markets, however, the penetration of mobile telephony has reached lower-income individuals as well (Jain, 2006). Thus, in modern heterogeneous markets, businesses continuously investigate demographic and psychographic profiles that affect subscriber interaction with telecommunication services (e.g., Chaudhuri, Flamm, & Horrigan, 2005; Rice & Katz, 2003). Their objective is to identify a number of distinct user groups and to serve them differently. For this, regulators utilize behavioral research to understand how subscribers, belonging to different market segments, develop perceptions and form behavioral outcomes of service usage, resulting in company revenues (Schejter, Serenko, Turel, & Zahaf, 2010). Therefore, mobile service providers may potentially discriminate against specific less profitable customer segments, for instance, low-income households who mostly subscribe to inexpensive basic plans, avoid premium services, live in remote regions, or are located in infrastructurally challenged areas.
To emphasize the importance of this issue, we may recall Hurricane Katrina, one of the deadliest natural disasters in the US history. Throughout this tragedy, wireless services were the only public communication means that remained intact. Thus, the potential use of mobile phones by lower-income individuals in the New Orleans area may have saved lives. Therefore, one may ask – ‘would things have been different had the Federal Communications Commission (FCC) enforced affordable access to wireless services for low-income families?,’ or ‘would things have been different had the FCC enforced certain quality standards (e.g., maximum number of disconnected calls) in low-income areas?’ It is believed that this argument conveys that both regulators and service providers should not only concentrate on differences in market segments to maximize their profits, but also on the facilitation of universal services.