Many European MNPs are active in multiple countries or are organizationally linked
across countries. Thus, one might think of competitive advantages of these providers
over competitors in national markets because of economies of scale on the organizational
or technical level or because of the opportunity of cross-subsidizing investments. I have
controlled for multi-national activities including company dummies and dummies for
multi-national activities in the estimation equations and I have used Hausman specifi-
cation tests for comparing the results of the restricted and the unrestricted models. In
doing so I could not identify a significant additional company-specific effect as well as
no significant difference between multi-national MNPs and national MNPs.
One outstanding issue in the empirical investment analysis are delays in investment ef-
fects. That is why one should use investments in a lagged form (Greenstein (2005),
Friederiszick et al. (2008)). I have tested alternative lag lengths also considering cyclical
investment effects. In doing so I could identify a four-period investment cycle. Nev-
ertheless, correcting for cyclical investment effects brings us to no significant deviation
to the model where one assumes contemporaneous investment effects. Moreover, with
a time-variant approach I get results which are strongly driven by a lower number of
observations.
Table 2 provides an overview over the data for the first and the last year of the estimation
period. Off-net traffic increases during the observation period by about 50 percent what
is, in my opinion, driven by mainly three factors: First, we observe an ongoing increase
in the number of mobile users in all countries over the observation period at a decreasing
growth rate over time what means that the saturation point of mobile communication
has not been reached yet (see OECD Communications Outlook 2007, chapter 4). A sec-
ond reason might be the change in the contract structure and also in the usage of mobile
phones. While in the early 2000s many customers used mobile phones mainly for short
calls or for short messages mobile devices changed their character to organizers with
music and photo applications. Thus, mobile devices became more important not only
for calling services but, moreover, as a standard companion in particular for younger
customers. Besides this change in usability mobile communication more and more sub-
stitutes and simultaneously complements fixed line telephony. Contract structures in
particular at the end of the observation period turned from minutes-based pricing to flat
rate offers which allows customers to ignore call length. Before, many customers used
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