Competition effect of a new mobile technology on an incumbent technology: An Indian case study

Abstract

Changes in mobile technology have radically altered people's lives by improving their ability to communicate. New mobile technologies in the market offer enhanced voice capability, high-speed data service, and expanded service coverage. In India, the spread of second-generation mobile technologies - global system for mobile (GSM) and code division multiple access (CDMA) - has led to a dramatic rise in teledensity, from approximately 1% in 1985 to 76.86% in 2011. This presents an interesting opportunity to study the competitive effects of the two technologies. In this paper, we analyze the effect of a new technology (CDMA) on an existing technology's (GSM) diffusion process and vice versa using an epidemic diffusion model that incorporates the competition effect. The results showed that the diffusion of CDMA was faster than that of GSM in India and CDMA diffusion had a positive effect on GSM. Further, despite competition, GSM continues to remain the dominant mobile technology in India. These findings offer useful insights into the diffusion process of mobile telephony in countries with multiple technology standards. They can potentially guide the design of diffusion strategies for future generations of mobile technology.