3wireless telecommunication technologies and on the nature of network pricing regulationand competition in the industry. By focusing on the economic literature, this chaptercomplements other surveys in this Handbook. Hausman (2002) focuses on technologicaland policy developments in mobile telephony rather than economic research per se.Cramton (2002) provides a survey of the theory and practice of spectrum auctions usedfor privatisation. Armstrong (2002a) and Noam (2002) consider general issues regardingnetwork interconnection and access pricing while Woroch (2002) investigates thepotential for wireless technologies as a substitute for local fixed line telephony. Finally,Liebowitz and Margolis (2002) provide a general survey of the economics literature onnetwork effects. In contrast, we focus here solely on the economic literature on themobile telephony industry.The outline for this chapter is as follows. The next section provides backgroundinformation regarding the adoption of wireless communication technologies. Section 3then considers the economic issues associated with mobile telephony including spectrumallocation and standards. Section 4 surveys recent economic studies of the diffusion of mobile telephony. Finally, section 5 reviews issues of regulation and competition; inparticular, the need for and principles behind access pricing for mobile phone networks.
Marconi’s pioneering work quickly led to variety of commercial and government(particularly military) developments and innovations. In the early 1900s, voice and thenmusic was transmitted and modern radio was born. By 1920, commercial radio had beenestablished with Detroit station WWJ and KDKA in Pittsburgh. Wireless telegraphy was