Modelling the development of supply-restricted telecommunications markets

A large proportion of the world telecommunications market can be characteri zed as supply restricted. In ITU (1999) official waiting lists numbered abo ut 50 million worldwide with an average waiting time of two years. More tha n 100 countries had not eliminated the waiting list for telephone connectio ns and hence a supply restricted market prevailed in all of these countries . Only about 25 countries have succeeded in eradicating their waiting list for basic telephone service. In terms of the pattern of diffusion, the subs criber's flow from waiting applicants to adopters is controlled by supply r estrictions adding an important dimension that needs to be addressed when m odeling and forecasting demand. An empirical analysis of the diffusion of m ain telephones in 46 supply-restricted countries is presented to demonstrat e the usefulness of a three-stage Bass model that has been proposed to capt ure the dynamics of supply restrictions. We also compare the forecasting ab ility of different approaches to estimation when panel data are available. Copyright (C) 2001 John Wiley & Sons, Ltd.