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Customer ignorance, price-cap regulation, and rent-seeking in mobile roaming

Author

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  • Ambjørnsen, Terje
  • Foros, Øystein
  • Wasenden, Ole-Christian B.

Abstract

Mobile phone usage when traveling abroad is expensive. Although the network connection switches frequently between available networks, the choice of network is largely independent of wholesale prices. As a consequence, we show that wholesale prices are strategic substitutes. The recent European price-cap regulation forces firms to reduce wholesale and retail roaming prices, but does not solve the underlying problem. There may thus be a permanent need for regulation analogous to what we have for domestic call termination. Furthermore, we show that there is a risk that wholesale price-cap regulation stimulates wasteful rent-seeking activity.

Suggested Citation

  • Ambjørnsen, Terje & Foros, Øystein & Wasenden, Ole-Christian B., 2011. "Customer ignorance, price-cap regulation, and rent-seeking in mobile roaming," Information Economics and Policy, Elsevier, vol. 23(1), pages 27-36, March.
    • Handle: RePEc:eee:iepoli:v:23:y:2011:i:1:p:27-36
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    References listed on IDEAS

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    Cited by:

    1. Martins, Carlos Lúcio & Fonseca, Maria da Conceição & Pato, Margarida Vaz, 2017. "Modeling the Steering of International Roaming Traffic," European Journal of Operational Research, Elsevier, vol. 261(2), pages 735-754.
    2. Fischer, Christian & Rasch, Alexander & Wenzel, Tobias, 2020. "Complex pricing and consumer-side attention," ZEW Discussion Papers 20-075, ZEW - Leibniz Centre for European Economic Research.
    3. Benno Buehler, 2015. "Do International Roaming Alliances Harm Consumers?," Journal of Industrial Economics, Wiley Blackwell, vol. 63(4), pages 642-672, December.
    4. Alves, Amanda M. & Brousseau, Eric & Mimouni, Nada & Yeung, Timothy Yu-Cheong, 2021. "Competing for policy: Lobbying in the EU wholesale roaming regulation," Telecommunications Policy, Elsevier, vol. 45(3).
    5. Barua, Bidushi & Matinmikko-Blue, Marja & Latva-aho, Matti, 2019. "On Design of Contracts Between Traditional MNOs and Local 5G Micro Operators," 30th European Regional ITS Conference, Helsinki 2019 205166, International Telecommunications Society (ITS).
    6. Baranes, Edmond & Vuong, Cuong Hung, 2021. "A model of international roaming regulation and competition in European mobile markets," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238008, International Telecommunications Society (ITS).
    7. Domínguez Lacasa, Javier, 2011. "Competition for Partners: Strategic Games in Wholesale International Roaming," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52159, International Telecommunications Society (ITS).

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