Impact of Network Externalities and Churn Analysis of Indian Telecom Market

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Manan Bhatia
Udayan Chanda

Abstract

Network externality is the effect that one user of a good or service has on the value of that product to other people. This effect in turn influences the decision making behavior of the user when it comes to using the product or accessing the service. In reference to the telecom industry, network externality comes into picture at various conjectures such as the user's preference of subscription to a particular network operator, to a particular tariff plan or to a particular Internet bandwidth among 2G/3G/4G. Further, this behavior drives the churn ratio for the network operators, which is the percentage of people expected to leave or change their network operator in the near future. This paper has been an attempt to understand such consumer behavioral patterns and identify the determinants of churn and the impact of network externality in the Indian Telecom Market by conducting an empirical analysis based on the data collected through a structured survey questionnaire.

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