Fan Zou

Date of Award

Spring 2022

Document Type

Open Access Dissertation

Department

Moore School of Business

First Advisor

Yan Dong

Abstract

The fast expansion of the mobile services market has propelled the growth of MVNOs to reach an expected 7.4% of the global market and, even higher, 8.1% of the North American market by 2022 (Research&Markets 2017), which reaches a total size of 90 billion US dollars. The growth of MVNOs, meanwhile, has complicated implications for MNO market performance because of the fast industry clockspeed, under which new mobile network technologies inevitably overlap with existing technologies (Tilson and Lyytinen 2006). Adding MVNOs to the value chain allows MNOs to develop proper growth strategies by exploring new technologies balanced against exploiting existing and proven technologies (Lee et al. 2003, Chandrasekaran et al. 2012b, Mishra et al. 2015). As the Federal Communications Commission (FCC) noted in their annual report, “MVNOs often increase the range of services offered by the host facilities based provider by targeting certain market segments, including segments previously not served by the hosting” (FCC 2013, p.3739)

From the two essays that comprise this dissertation, the first essay aims to explain the impact of MVNOs with different ownership (i.e., branded and third-party MVNOs) on the market expansion of their hosting MNOs under the context of overlapping generations of mobile technologies. The second essay estimates the customer demand of MVNOs with different market positioning (i.e., discount and telecom MVNOs) and how their interaction may differ across different generations of mobile technologies. Research questions proposed in the essays are answered by econometric analysis of dynamic propensity score matching and nested structural models on proprietary data collected from a research company specialized in the mobile network industry.

We find that discount MVNOs help with the market expansion of their hosting MNOs. From a dynamic perceptive, the effect of branded MVNOs diminishes over time, while third-party MVNOs become stronger as the market matures. Though benefit the market expansion, discount MVNOs may increase the price competition in the market and hinder the customer conversion from pre-paid to post-paid. Luckily, such disturbances could be mitigated by the market differentiation of service bundling brought by telecom MVNO. Moreover, the synergy between discount and telecom MVNO is more prominent in advanced mobile technologies. Overall, our finding suggests that, from a short-term market expansion perspective, if the focus is to quickly seize the market share with new mobile technologies, branded MVNOs are preferred. On the other hand, if the focus is to expand in a niche, mature market, delegating to third-party MVNOs may be more effective. On the other hand, from a long-term market planning perspective, offering telecom MVNOs helps lock in customers and reduce churn rates.

Rights

© 2022, Fan Zou

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