Technology interactions and network effects: Predicting the impact of VOIP on the telecommunications industry.

Abstract

In this article we discover the interactions among three communications technologies, fixed-line telephony, mobile telephony and the Internet, modelling the network externalities and controlling for per capita income and technology prices. The models were estimated using a dataset on adoption levels for 195 countries. We find that (1) mobile telephony and Internet are fully complementary; (2) fixed telephony fosters the diffusion of mobile telephony, which on its turn cannibalises the diffusion of fixed phones; (3) fixed telephony facilitates the diffusion of Internet, but Internet diffusion does not have any significant effect on fixed telephony diffusion. These results can help build more robust scenarios to foresee the impact of the VOIP on the telecommunications industry.