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Empirical Analysis of Substitution or Complementary Effect Between WiBro and Existing Telecommunication Service  

Han Sang-Pil (한국과학기술원(KAIST) 테크노경영대학원)
Park Bong-Won (한국과학기술원(KAIST) 테크노경영대학원)
Ahn Jae-Hyeon (한국과학기술원(KAIST) 테크노경영대학원)
Kim Moon-Koo (한국전자통신연구원(ETRI)정보통신서비스연구단)
Publication Information
Korean Management Science Review / v.22, no.2, 2005 , pp. 35-49 More about this Journal
Abstract
When new services are introduced, interaction among existing and new services has to be considered. The interaction can be characterized by the substitution or complementary effect among services. This paper analyzes how the interaction among services affects the customers' subscription decision in telecommunication services industry. Based on a face-to-face in-depth survey from a sample of 1,200 respondents, a new wireless internet access service or WiBro is analyzed to identify the substitution/complementary effect in relation to the existing other telecommunication services. Additionally, the important factors explaining both customers' subscription and substitution decisions are identified. The analysis results indicate that males and students are more likely to subscribe WIBro service. Interestingly, family size positively affects the subscription decision. However, heavy users of on-line game are reluctant to subscribe WiBro service. Among the potential WiBro subscribers, the customers who are less satisfied with the existing fixed line broadband internet access service are more likely to stop subscribing the fixed line service, which implies substitution by a new service. We believe that the consideration of the interactions among services is essential to devise a winning strategy for the new services in the highly uncertain telecommunications business environment.
Keywords
WiBro Service; Substitution/Complementary Effect; Telecommunications Business;
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