Impacts of mobile Internet use intensity on the demand for SMS and voice services of mobile network operators: An empirical multi-method study of German mobile Internet customers

Scholarly and business publications alike convey the message that past and future strong growth in mobile Internet (MI) access and service demand has solely positive commercial implications for mobile network operators (MNOs). This position neglects the possibility that increasing MI use intensity may lead to demand decreases for the highly profitable short messaging service (SMS) and mobile voice telephony. The extant literature provides few insights on relations between MI use intensity, on the one hand, and SMS as well as mobile voice call use intensities, on the other hand. This study developed hypotheses concerning the presence or absence of impacts of MI use intensity and circumstances of MI use (e.g., device type, tariff scheme) on the demand for SMS and mobile voice telephony at the individual customer level. The hypotheses were tested by analyzing actual use behaviors of 304 MI adopters in Germany, for whom objective use intensity data were extracted from the billing system of an MNO. These non-reactive measures were combined with responses collected from the adopters through a telephone survey. Multivariate regression results suggest that though MI use intensity significantly negatively affected both number of SMS sent and received, these effects were so small that their practical relevance is highly doubtful. Further, customers who used MI more intensively did not generate lower volumes of outgoing or incoming mobile voice connection minutes. Conclusions are drawn for MNO, telecommunications sector regulators and scholarly researchers seeking to explain the acceptance of mobile communications services. & 2010 Elsevier Ltd. All rights reserved. 1. Research background and questions Market analysts agree that demand for Internet access through nationwide cellular wireless networks via various portable devices, that is mobile Internet (MI), has started to boom in the past few years. Further hefty MI subscriber and traffic growth is expected in the near future. IDATE (2009) forecasts that the number of MI customers in Europe will increase from about 70 million at the end of 2008 to more than 160 million at the end of 2012. With regard to the US, the IDATE prediction for this timeframe is that the MI subscriber number will move from 35 million to 110 million. Similarly, Cisco Systems (2009) expects that the average monthly global MI traffic will increase from 0.033 million terabyte in 2008 at a compound annual growth rate of 139% to 1.076 million terabyte in 2012.