A network analysis of consumer choices of telecommunications providers in the UK and China

Abstract

This thesis empirically compares the network effect in the mobile telecommunications between the United Kingdom and the People’s Republic of China. Institutional and regulatory differences between these countries enable an interesting comparative analysis. Data was obtained from questionnaires submitted to Chinese and UK university students. Using both quantitative and econometric techniques, this thesis finds that, under tariff-mediated network effects, consumers within the same social network tend to coordinate their choice of mobile service providers. This coordination behaviour is not significant in the absence of such induced network effects, suggesting that the source of influence is local network effects, rather than learning spillovers or peer pressure. The study has important implications for regulation in network industries. In the UK mobile market, regulation on telecommunications infrastructure and network access encourages competition between service providers; while in PR China, price regulation on network service limits the pricing strategy for firms, resulting in a market dominated by the incumbent.