Abstract
Considerable debate surrounds the provision of mobile telephony to remote and rural Australians. Disquiet about the closure of the analogue network, controversy over its replacement and recognition of potential rural competitiveness from digital technologies are all significant aspects of this debate. Within the discussion surrounding regional and rural development, there is a growing concern over the standard of mobile telecommunications infrastructure in non-metropolitan Australia. Of particular interest are the mechanisms by which infrastructure is provided. More specifically, there appears to be a need for public subsidies for mobile networks since demand may be insufficient to stimulate provision through normal market processes.
This paper explores these arguments by drawing on data from the Upper Murray region of New South Wales and Victoria. Empirical results indicate a significant current expenditure by present mobile telephony users and a preparedness to increase this expenditure under an improved service scenario. There is also evidence of relative price inelasticity. This evidence is used to question the conventional wisdom of providing public funds to telecommunications firms to encourage extension of the mobile network to all rural communities.
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