The aim of this study is to provide evidence-based analysis of the effect of competition on investment and consumer outcomes in the mobile sector. It explores the hypothesis as to whether there is a ‘virtuous circle’ between competition and investment, or whether, as has been claimed, more intense competition may undermine investment, harming consumer outcomes in the long term. Our assessment is based on empirical analysis from 12 countries, eight of which are European (besides the UK: Austria, France, Germany, Ireland, Italy, Netherlands, Spain) and four are non-European (Australia, Japan, South Korea und the U.S.).
This study aims to provide insights that may be relevant to competition and spectrum policy at European level, as well as providing an input to Ofcom’s Strategic Review of Digital Communications which specifically considers competition and investment in converged communications infrastructure.
On the basis of our analysis including econometric assessments, we have found no linkage between consolidation or higher concentration in mobile markets and an increase in investment. Investment tends to follow long-term investment cycles which appear to be largely unrelated to developments in market structure in the countries assessed.
The evidence also does not confirm that consolidation and higher concentration in mobile markets is linked to an improvement in consumer outcomes. The major potential drivers of better consumer outcomes - notably higher connection speeds, higher mobile penetration and higher data usage - can be found on the demand side. Higher connection speeds are linked to higher smartphone penetration. Both higher mobile penetration and higher data usage are linked to higher mobile video usage. Demand factors thus seem to have a major role in explaining better consumer outcomes.
The study is available (in English) for download.
See also: Competition & investment: An analysis of the arivers of superfast broadband
