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Estimating switching costs after introducing Fixed-Mobile Convergence in Japan

By A. Nakamura

Abstract

In this study, based on a conjoint-type survey analysis, the switching cost of several Japanese telecom services are empirically examined simultaneously, contingent on each carrier's bundling strategies. The results suggest the following conclusions. The hierarchy of switching costs is mobile phone service, fixed phone service, ISP (Internet Service Provider), and broadband access service, in descending order. Even if the government prohibits the formerly state-owned monopoly NTT from forming alliances with other carriers, the legacy NTT group would still command more than half of the market share under FMC if each carrier adopts a pure bundling strategy. If mixed bundling emerges as the primary strategy in the FMC market, the resulting type of competition from the introduction of FMC does not stimulate competitive pricing.Switching costs Telecom market Discrete choice model Leverage

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