Determinants of Willingness to Pay for Mobile Telecommunications Services in Nigeria

Abstract

Notwithstanding the far-reaching contribution of the mobile telecommunications sub-sector in Nigeria’s socioeconomic development, Nigeria is among the countries with the poorest readiness and usage of telecommunications among key economic agents. This study therefore, attempted to ascertain the factors that inhibit consumers access to telecommunications through microeconomic concept of contingent valuation of willingness to pay, using survey data of  5 600 individual consumers. This was estimated with censored Tobit model. The result shows that demand for mobile telecommunications varies considerably with consumers socio-economic factors, while access is limited by network coverage, quality services, interconnectivity, and call tariff.  To ensure that productivity gain in telecommunication are passed to consumers, the paper suggested price cap regulation to determine the maximum allowable price increases for operator’s services as well as interconnectivity charges. It is also important to facilitate consumers’ migration to any network of choice without necessarily changing their existing GSM number.

Keywords: Nigeria, Access, mobile telecommunications, contingent valuation, willing to pay, tobit model