Mobile voice diffusion and service competition: A system dynamic analysis of regulatory policy

Dynamic behavior in mobile telecommunications markets is often the result of interactions between market actors. As the structure and dynamic complexity of such interactions tend to be difficult to identify, it is challenging for regulators to anticipate the effects of their policy decisions. This article uses system dynamics to evaluate the effect of technology harmonization and mobile number portability policies on mobile voice diffusion and service competition. This is realized by first modeling the endogenous feedback structure resulting in dynamic behavior in the mobile telecommunications market and then by configuring the model for retrospective simulations of the Finnish market. Based on the retrospective simulations, the effect of technology harmonization and mobile number portability policy decisions is analyzed and the usefulness of system dynamics is demonstrated.

► We use system dynamics to evaluate the effect of technology harmonization and mobile number portability policies on mobile voice diffusion and service competition. ► We create a conceptual feedback model, formalize it into a quantitative simulation model and use it to retrospectively depict dynamics in the Finnish market. ► Results point out differences in used policies and show how endogenous feedback structure between market actors gives rise to observed market behavior.