Introduction

Celcom Axiata Berhad, has been operating in Malaysia since 1988 and it’s the oldest mobile telecommunication company in Malaysia.  It provides both prepaid and postpaid mobile services to more than 12.7 million subscribers and is the leading mobile broadband service provider in the country with over 1 million subscribers.(Celcom Axiata Berhad, 2013)

It is one of only four 3G service providers in Malaysia, the other three being U Mobile, DiGi and Maxis. 3G is the third generation of mobile phone standards and technology, successor of 2G. Analog cellular phones were the first generation. Digital phones marked the second generation (2G).3G is loosely defined, but generally includes high data speeds, always-on data access, and greater voice capacity.

The high data speeds are arguably the most important feature, and certainly the most marketed. They enable such advanced features as live, streaming video. There are several different 3G technology standards. The most prevalent worldwide is WCDMA (also known as UMTS). WCDMA is the 3G technology of choice for most carriers that used GSM as their 2G technology.(Phonescoop, 2013)

With the country's widest network, Celcom covers 95.2% and 83.7% of the Malaysian population with its 2G and 3G networks respectively. Celcom continues to invest in network coverage, capacity and performance. Its aim is to maintain its technology leadership and position as the country's best mobile service provider.

Reasons for Selection

Cellphones and Mobile Broadband have become essential to most people in developing and developed countries alike to continue their daily life. It’s even been proven to the point that governments in countries such as the US even offer subsidies to those unable to afford it.

The basis of this subsidy is that if someone can’t afford a phone, they can’t call a doctor or answer a call back from a potential employer. Even during an emergency such as witnessing a criminal act or being in danger, the amount of safety given to people who have access to a method of contact is far higher. Employment opportunities will also significantly drop as most employers expect individuals to be reachable with a mobile communication device at nearly all times.(Kasper, 2013)

Mobile Subscription has also played a large part in this because without a service provider a mobile phone is useless. As such mobile service providers in Malaysia, play a huge role in people’s lives.

We have decided to select this topic, to figure out exactly what are the demand factors that affect the Mobile Communications Industry and how people decide on which mobile subscriber to go with.

Market Competition

The market structure for cellular network services is oligopolistic competition. In these types of markets the industry is dominated by a few firms, in this case: Celcom, U Mobile, Maxis and DiGi.

Oligopolists are price takers and the barriers to entry the market are high due to access to expensive, complex technology and economies of scale. In this situation another important barrier to entry is the limited amount of licenses provided for cellular networks.

Oligopolies can retain long run abnormal profits due to high barriers of entry preventing sideline firms from entering the market to capture excess profits.

The products provided by these oligopolists are also virtually homogeneous with slight changes in coverage and data services.

Problem Statement

  What factors are considered when purchasing a Mobile Network ?

      If a individuals current Cellular Network increased the price of its services, how will customers react?(Price Elasticity of Demand-PED)

      If another Cellular Network were to reduce price, would individuals change their mobile service provider?(Cross Price Elasticity of Demand-CPED)

Objectives

To analyze and understand the main demand factors that affects the decisions of consumers in subscribing to Mobile Network Providers.

The PED and CPED of Celcom and how sensitivity to prices affects the consumers decision making process.

Limitations

A survey will take far more time to complete than most other methods of research and it is resource consuming.

The probability of human error is relatively high and if the data from the survey is not collected carefully, the error could have an immense effect on the results accuracy.

Since the survey is based on random individuals, problems such as personal issues and even unawareness of the significance and purpose of investigation could yield survey information useless or at least inaccurate.