The Impact of Mobile Number Portability on Demand Price Elasticities in Sub-Saharan African Countries
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Onkokame Mothobi
Abstract
This paper examines the effect of mobile number portability (MNP) on own- and cross-price elasticities. We use quarterly data for 27 mobile operators in seven Sub-Saharan Africa countries between 2010Q4 and 2014Q4 to estimate a differentiated products demand model. We find that the implementation of MNP increases price elasticities of demand for mobile services. This increase in price elasticities may be a result of reduction in switching costs between operators. On average, the introduction of MNP increases own-price elasticities by 0.47 in absolute value. We compare the level of price elasticities before and after the implementation of MNP in Ghana and Kenya, which implemented this policy in the time period of our study. Our results suggest that in Ghana, MNP increased own-price elasticities by an average of 0.35 in absolute term from an average of −0.74. In Kenya, the introduction of MNP increased own-price elasticities by an average of 0.21 in absolute term from a lower average of −0.39. However, we find that the average own-price elasticities in Kenya and Ghana remained small even after the implementation of MNP relative to other countries without MNP in place.
Data sources for MTRs.
| Country | Data source |
|---|---|
| Botswana | www.bocra.co.bw; www.emeraldinsight.com |
| Ghana | www.itu.int |
| Kenya | www.standardmedia.co.ke |
| Mozambique | www.researchictafrica.net; http://researchictafrica.net |
| Nigeria | www.itu.int; www.techcentral.co.za |
| South Africa | www.helgilibrary.com |
| Zambia | news.idg.no; www.mediastudies.co.za |
Distribution of minutes and SMS depending on time and destination network.
| Timing | Minutes | Share with discount |
|---|---|---|
| On-net-peak | 12.55 | 0.60 |
| On-net-off-peak | 7.91 | 0.50 |
| Off-net-peak | 6.82 | 0.40 |
| Off-net-peak | 6.26 | 0.50 |
| Off-net-off-peak | 3.94 | 0.40 |
| Off-net-offoff-peak | 3.40 | 0.60 |
| Fixed peak | 4.42 | 0.50 |
| Fixed off-peak | 2.78 | 0.40 |
| Fixed offoff-peak | 2.40 | |
| On-net peak SMS | 18.02 | |
| Off-net-peak SMS | 31.02 | |
| Off-net-off-peak SMS | 15.98 | |
| Total minutes | 50.48 | |
| Total SMS | 100 |
Source: Research ICT Africa.
Notes: The number of minutes depending on time of call and destination network, which were assumed to create price for voice call services. Column (1) shows the number of minutes/SMS and column (2) presents the share of minutes that are charged at discounted prices.
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