The research on the substitution effect between the wireless and fixed telecommunication industry

Wireless telecommunication has developed at a rapid pace than the fixed telecommunication since the last decades of twentieth century. This article analyzes the effect wireless mobile telecom substitutes for the fixed telecom by employing the normal theory of substitution and econometrics model. The analytical results are consistent with the reality, and it has been observed that the relation between the wireless and fixed telecommunication industry has changed from state of being complementary in the early last decades of twentieth century to that of being substituted at present. Moreover, the enhanced progress of telecommunication technology especially in wireless areas enriches customers＇ demands in terms of multimedia contents thereby changing their communication style, which significantly promotes the rapid growth of wireless mobile communication and strengthens the effect of the substitute.