1 UMTS Growth Model, A System Dynamics Model for Simulating the Take-up of UMTS

Within a few years, the Universal Mobile Telecommunication System (UMTS) is expected to be commercially available. This system is the European implementation of third generation mobile telecommunication and is expected to be the successor of second generation systems like GSM (Global System for Mobile communication). A key uncertainty is how and at what speed the customer take-up of UMTS is likely to proceed, especially in relation to the current use of second generation systems. This question is of importance to telecom operators because it could significantly influence their strategic decision making. Since this problem involves strategic, long term considerations and it does not have the level of detailed specification required for more exact forecasting techniques, a System Dynamics approach was used to build a Powersim model. The model takes into account the key factors in the take-up and migration process and allows the user to simulate different scenarios of UMTS take-up in the United Kingdom in order to develop a general insight into the market dynamics. Three different groups of UMTS users are taken into account: (1) new users (users that have not used second generation systems), (2) second generation users migrating to UMTS and (3) users who migrate to UMTS but keep on using second generation systems (dual users). The market is divided into two segments: business and residential users. Important factors relating to the take-up of UMTS that are taken into account are: quality of service, hardware quality, cost, technological developments and customer attitude