Title: Essays in Telecommunications Management and Policy

Date: 25/08/2017

Time: 16h

Location: Sala 0.19, Informatica II pavilion, Instituto Superior Técnico, Universidade de Lisboa 

Advisor: Professor Pedro M. Ferreira and Professor Mário J. Gaspar da Silva 

Co-advisors: Professor Miguel Godinho de Matos

Abstract: As digitization increasingly reshapes the landscape of home-based telecommunication industries, telecommunication companies react to the challenges with various strategic managerial policies. Consumers in the meantime, are directly influenced by such policies. The welfare impacts are usually complicated and non-transparent to both consumers and policy makers. My thesis aims at leveraging large-scale fine-grained empirical data to investigate the impacts of several prevalent firm initiated strategies on both sides of the market, i.e. consumers and firms. The thesis comprises of three studies. The first study focuses on measuring the impact of service contract policies that are prevalent in home-based telecommunication services in many developed countries. We study the impact of shortening the lock-in periods associated with triple play service contracts on both firms and consumers using household level data from a large telecommunications provider. We show that shortening the lock-in period decreases the profit of the firm more than it increases consumer surplus and, therefore, regulators need to be very careful when considering regulating these periods. If regulators shorten lock-in periods then firms are likely to respond by increasing prices to maintain their return on investment. The analyses show that this behavior, however, will make consumers worse off compared to the world in which lock-in periods do not change. This result shows that regulators shortening lock-in periods may also need to regulate prices to avoid a significant loss to consumers. The second and third study investigates how consumers combine different sources of social information when making online search and purchase decisions. In the second study, we use individual level clickstream data from a Video-on-Demand service to study how consumers combine two channels of social information, from friends vs from the crowd, differently when they are just browsing and when they are effectively considering purchasing a product. We find that in our case, consumers seem to start by browsing products they heard about from friends and popularity signals seem to only play a role closer to purchase. This result shows that a good way to help consumers navigate large catalogs of products might be to first show them products that consumers similar to them bought and then later highlight the popularity information. As part of future work, I propose in the third study an incentive-aligned randomized online lab experiment to extensively study the mechanism of social influence during consumer shopping process. We aim to leverage the randomized experiment to disentangle the social influence from a series of potentially confounded unobservables. Supplementary survey responses will be analyzed in order to better understand the role social signals play during different stages. With a more thorough understanding of the mechanism of social influence through both the observational study and randomized experiment, we aim to study the potential impact of firm's strategical manipulation in the display of social signals on both sides of the market.