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Mobile Call Termination

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Author Info
Mark Armstrong
Julian Wright

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Abstract

We analyse charges levied by mobile telephone networks to deliver calls. We integrate two literatures: one analysing calls from the fixed network, where predicted unregulated termination charges are too high, and one analysing calls from rival mobile networks, where predicted charges are too low. In practice, however, networks adopt uniform charges for terminating both kinds of traffic, as do regulators. We show how incorporating wholesale arbitrage and demand-side substitution helps to reconcile theory with practice. In our framework, the unregulated charge is uniform and typically lies between the efficient and monopoly benchmarks. There remains a rationale for regulation, albeit reduced. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2009.02276.x
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Publisher Info
Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 119 (2009)
Issue (Month): 538 (06)
Pages: F270-F307
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Handle: RePEc:ecj:econjl:v:119:y:2009:i:538:p:f270-f307

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gans, Joshua S. & King, Stephen P., 2000. "Mobile network competition, customer ignorance and fixed-to-mobile call prices," Information Economics and Policy, Elsevier, vol. 12(4), pages 301-327, December. [Downloadable!] (restricted)
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  2. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February. [Downloadable!] (restricted)
  3. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring. [Downloadable!] (restricted)
  4. Hahn, Jong-Hee, 2004. "Network competition and interconnection with heterogeneous subscribers," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 611-631, May. [Downloadable!] (restricted)
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  5. Wright, Julian, 2002. "Access Pricing under Competition: An Application to Cellular Networks," Journal of Industrial Economics, Blackwell Publishing, vol. 50(3), pages 289-315, September. [Downloadable!] (restricted)
  6. Hoernig, Steffen, 2007. "On-net and off-net pricing on asymmetric telecommunications networks," Information Economics and Policy, Elsevier, vol. 19(2), pages 171-188, June. [Downloadable!] (restricted)
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  7. Tommaso Valletti & George Houpis, 2005. "Mobile Termination: What is the “Right” Charge?," Journal of Regulatory Economics, Springer, vol. 28(3), pages 235-258, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Behringer, Stefan, 2008. "Asymmetric Equilibria and Non-Cooperative Access Pricing in Telecommunications," MPRA Paper 11795, University Library of Munich, Germany. [Downloadable!]
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  2. Hurkens, Sjaak & Jeon, Doh-Shin, 2009. "Mobile Termination and Mobile Penetration," IDEI Working Papers 575, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  3. Helen Weeds, 2009. "Superstars and the Long Tail: The impact of technology on market structure in media industries," Economics Discussion Papers 669, University of Essex, Department of Economics. [Downloadable!]
  4. Christos Genakos & Tommaso Valletti, 2008. "Testing the “Waterbed” Effect in Mobile Telephony," CEIS Research Paper 110, Tor Vergata University, CEIS, revised 11 Jul 2008. [Downloadable!]
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  5. Sjaak Hurkens & Doh-Shin Jeon, 2009. "Mobile Termination and Mobile Penetration," UFAE and IAE Working Papers 777.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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