How pricing dynamics affect mobile usage - Price sensitivity and talk time trends in developed and developing economies
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Total global mobile voice minutes reached an estimated 1.6 trillion in 2010, a figure some ten times greater than the corresponding amount in 2001. This means that the actual usage of mobiles has grown almost twice as fast as the number of connections, which grew from around 950 million to 5.4 billion over the same nine year period. This is equivalent to an increase from three to five hours of call time per user per month across the world, and has come about as a result of a simultaneous drop in the effective price per minute (EPPM) of calls to a quarter of what it was nine years previously. Average prices in the developing world declined at more than twice the rate of those in the developed world over this period, meaning that the reported average minutes per user per month (MoU) is now broadly the same across the two regions.
Given this data we can model the sensitivity of demand for mobile usage in relation to price. Subsequently we have found that at the global level, every one US cent decrease in EPPM results in an average increase of 5.6 minutes calling time per month for every mobile user in the world. The equivalent MoU increases for the developed and developing world are 6.9 and 13.5 minutes respectively, meaning that on average mobile users in the developing world are almost twice as price sensitive as those in the developed world.
MoU versus EPPM (US$), selected markets, 2010
Source: GSMA Intelligence
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