Estimating Willingness to Pay for Improvements in Mobile Services

The prominent approach for estimating people’s willingness to pay (WTP) for goods or services not currently in the market is the stated preference approach. Two methods of measuring stated WTP are contingent valuation method and choice experiments. We employ both methods in order to estimate consumers’ valuation of improvements in mobile services, focusing on 4G upgrades and roaming services. The contingent valuation method is performed in the payment ladder format, in order to estimate a nominal WTP for 4G. The choice experiment splits up the “mobile service improvement” into attributes, and investigates the preferences for these individual attributes: increased mobile internet speed (possible with 4G), unlimited mobile internet use, improved quality (possible with 4G) and unrestrained use in two neighbouring countries (unrestrained roaming). We collect the data for the study through a face-to-face survey held in all districts of North Cyprus. The results indicate that people value unrestrained roaming services the most. Increased speed and unlimited use attributes are next, and are similarly significant at the 1% level. The impact of improved quality is statistically insignificant at the 5% level, suggesting that consumers are content with the current level of quality they receive with 3G. We conclude that bilateral roaming regulation between governments is more valuable than 4G investments. Keywords: Mobile telecommunication services, Choice experiment, Willingness to pay, 4G, Roaming.