A matter of connections: OECD telecommunications sector productivity and the role of cellular technology diffusion

Abstract This article examines the impact of cellular technology diffusion on the competitiveness of the telecommunications sector for 23 OECD countries for the period 1980–1995. Cellular technology diffusion has proceeded rapidly in several OECD countries, providing substantial inter-connectivities with the fixed line telephone network, but there is substantial cross-sectional variation. Thus, consequences of cellular telephony on sector competitiveness, measured as relative productive efficiency, can be assessed. The results show that, controlling for a variety of other factors that can affect telecommunication sector productivity performance, cellular technology diffusion has a positive and significant impact on the competitiveness of the telecommunication sector. In addition, among the control items considered in our analysis, we find that liberalization of the competitive environment and privatizing the monopoly operator are factors positively enhancing productive efficiency. These are important findings highlighting the importance of micro-economic reforms in the telecommunications industry.