Assessing the value of 3G and 4G network modes in mobile phone pricing
| DOI | https://doi.org/10.1108/DPRG-10-2021-0135 |
| Published date | 30 August 2022 |
| Date | 30 August 2022 |
| Pages | 380-397 |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
| Author | Tanvir Ahmed,Waseem Ahmad,Bashir Ahmad |
Assessing the value of 3G and 4G
network modes in mobile phone pricing
Tanvir Ahmed, Waseem Ahmad and Bashir Ahmad
Abstract
Purpose –Mobile phone network third-generation (3G) and fourth-generation(4G) modes are the most
commonly used modes in many developing countries. This study aims to assess the impact of these
networkmodes and other mobile phone attributes on theirretail prices in Pakistan, the fifth most populous
and developingcountry.
Design/methodology/approach –This study has been conducted in Punjab province, which shares
about 53% of the Pakistan’spopulation. Hedonic price analysis was carried out on all new mobile phone
attributes sold in Punjab’s markets at the retail level. Various econometric tests, that is, Ramsey
regression equation specification error, Breusch–Pagan/Cook–Weisberg and variance inflation factor,
were calculatedto check the robustness of the results.
Findings –Results of this study indicated that the mobile phone priceswere significantly higher for the
sets having 4G network mode than the 3G mode. In addition to this, other mobile phone attributes that
significantly influenced their prices were brand, weight, camera, random access memory (RAM),
memorysize, operating system, battery capacity and display size.
Research limitations/implications –This study has implicationsfor mobile phone sales and marketing
strategies of the manufacturers,importers, retailers and others involved in the mobile phone businessin
developing countries likePakistan. Mobile phone manufacturers/importers can increase their profitsby
producing/importingthe 4G enabled devices.
Originality/value –Although many studies inthe literature estimated the implicit price of mobile phone
attributes, none of these had explicitly assessed the impact of network mode generation of mobile
phoneson theirprices.
Keywords Value, Mobile communications systems, Pricing, Mobile phone attributes, Retail market,
3G, 4G, Network
Paper type Research paper
1. Introduction
Mobile phone communication is animportant means for the wireless transfer of information.
The systems available in markets are identified by generation designations that have their
characteristics, with both advantages and disadvantages. First-generation (1G) and
second-generation (2G) systems were introduced in the early and late 1980s, respectively.
These generations were primarily used for voice communication. The major drawbacks of
1G communication systems were bad voice quality, poor battery time, frequent call drops,
limited capacity, no security, poor handoff reliability and large phone size (Vora, 2015).
Similarly, 2G network systems had limited applicability, storage and communication
capacity (Vanags and Gravelis, 2015). Third-generation (3G) systems made their
appearance in late 2002 and 2003. It provided data transmission speed 3–10 times faster
than 2G. This system was designed not only for voice and paging services but also for
interactive media use such as internet access (Lehr and Chapin, 2010)and
teleconferencing. Fourth-generation (4G) mobile data transmission rates are up to 100 MB/s
for a moving user and 1 GB/s for a stationary user (Faisal, 2010). 4G is a fully interface
Tanvir Ahmed is based at
the Department of
Economics, Forman
Christian College
(A Chartered University),
Lahore, Pakistan. Waseem
Ahmad is based at the
Institute of Business
Management Sciences,
University of Agriculture,
Faisalabad, Pakistan.
Bashir Ahmad is based at
the Institute of Agricultural
and Resource Economics,
University of Agriculture,
Faisalabad, Pakistan.
Received 15 November 2021
Revised 3 April 2022
18 May 2022
30 July 2022
Accepted 9 August 2022
The authors would like to thank
the Higher Education
Commission of Pakistan for
funding this study.
Disclosure of interest: The
authors declare that there are
no competing financial, general
and institutional interests that
may be perceived to influence
the results and discussion
reported in this paper. The
authors had authority over
manuscript preparation and
decisions to submit the
manuscript for publication.
PAGE 380 jDIGITAL POLICY, REGULATION AND GOVERNANCE jVOL. 24 NO. 4 2022, pp. 380-397, ©Emerald Publishing Limited, ISSN 2398-5038 DOI 10.1108/DPRG-10-2021-0135
message processor (IMP) based network and improves data transfer dramatically. In this
system, signal disruptions areminimum and downloads are merely a matter of seconds. 4G
has many advantages over 3G. It has a faster transfer speed, higher transfer quality and
lower cost. Now, 4G has entered the intensive stage of popularization, and most mobile
phones support the 4G network. 4G mobile phone technology is considered an engine of
business growth that intensively operates in media, entertainment and e-commerce. This
technology improved the efficiency and productivity of businesses because of its reliable
and faster mobile data transfer services. The uptake of 3G and 4G wireless technologies
depends on the region and the timing of when these technologies are made available by
communication service providers and governments. According to GSMA (2020), 3G and
4G networks covered 90% and 82% of the population in low- and middle-income countries,
respectively, accountingfor three-quarters of the connected people in 2019.
Mobile technologies and services contributed 4.5% to global gross domestic product
(GDP) or $3.6tn in 2017. This contribution is expected to reach $4.6tn or 5% of GDP by
2022. In 2017, the mobile ecosystem provided 29 million jobs and generated $500bn
through general taxation and $25bn through mobile spectrum action (GSMA, 2018).
According to Edquist et al. (2018), 10% increasein mobile broadband penetration results in
a 0.6%–2.8% increase in GDP. The number of people connected to mobile services in
developing countries is 3.7 billion, and globally, it has surpassed 5 billion. About three-
quarters of global mobile phone users make use of the internet. Around one billion more
mobile phone users will start using the internet by 2020. Mobile internet penetration is
expected to be 61% of the global population and 86% of unique subscribers by 2025. A
major increase in mobile internet users from 2017 to 2025 will come from developing
countries. This growth would increase population coverage of 3G and 4G networks (GSMA,
2018). In 2017, 4G accounted for one-fourth of mobile phone users globally, whereas the
rest were served by 3G and 2G (GSMA, 2017). In 2015, 3G connections represented 34%
of mobile connections and 43% of traffic, whereas 4G connections represented 14% of
mobile connections and 47% of mobile traffic (Sumits and Andra, 2016). It is projected that
from 2016 to 2025, there will be an addition of 3.6 billion 4G users. It is also expected that
63% of the global base will be on 4G speed by 2025. As about one-third (1.2 billion) of the
population of developing countries lives outside the range of 3G or 4G signals, many
operators will invest in 3G and 4G networks to increase the coverage and capacity in
developing markets (GSMA, 2017).
Mobile communication requires a network that can transfer information at the rates needed
and a device that can download data at a sufficiently high speed and connect to that
network. With developments in communication devices over time, mobile phones are
becoming the center of various equipment commands. They help users with sending
messages, placing phone calls, watching videos, playing games, etc. The development of
mobile data networks like 3G in the past encouraged handset manufacturers to develop
devices that could exploitthe opportunities provided by mobile networks. 3G mode resulted
in a significant increase in the share of smartphones with 3G connection, that is, from 35%
in 2006 to 90% in 2012 (Cecere et al.,2014). To exploit the online capabilities of devices,
manufacturers embedded global system networks (2G, 3G and 4G networks) into their
phones. As a result, most smartphones have 3G or 4G connectivity (Cecere et al.,2014).
Because of the introduction and expansion of 3G and 4G mobile networks along with the
development of smartphones (Edquist et al., 2018), the data traffic increased by 65% per
year from 2010 to 2015 (Ericsson Mobility Report, 2016). Consumers prefer high-quality
mobile phones and are willing to pay a high price for technologies involved in new
generations of mobile telephony because of better data rates under fast and reliable
communication.
The advancement in wireless internet technology has created new value positions for
internet-enabled mobile phones. As the mobile devices and communication technologies
VOL. 24 NO. 4 2022 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 381
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