Market structure and penetration in the Latin American mobile sector

Abstract

Purpose

This paper aims to offer an analysis of the market structure in the mobile telephony market in Latin America and its impact on its development. Given the importance of mobile services as a mean of ICT access to low income groups, the objective behind this analysis is to understand how the trend in market structure may impact the use of mobiles by low‐income sectors of the population in Latin America.

Design/methodology/approach

The paper analyses the process of consolidation that the region experiences today in the mobile market and identifies the effect this concentration has had on mobile welfare indicators such as penetration. It examines the links between variables associated with market concentration and known to influence mobile penetration such as tariffs, pricing strategies and spectrum allocation.

Findings

The results do not identify a strong association between market concentrations and pricing, which appears to contradict standard textbook reasoning. However, there appears to be a strong correlation between prices and radio spectrum allocation; countries that have a very low spectrum allocation are the ones that have the highest prices.

Originality/value

The value of this analysis lies in the identification of a straightforward regulatory policy suggestion that supports results form other empirical studies; regulators need to allocate more spectrum in order to promote competition.

Citation

Mariscal, J. (2009), "Market structure and penetration in the Latin American mobile sector", info, Vol. 11 No. 2, pp. 24-41. https://doi.org/10.1108/14636690910941867