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Access Regulation and the Adoption of VoIP

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  • Paul de Bijl

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  • M. Peitz

Abstract

In this paper, we analyze the effect of access regulation and retail price regulation of PSTN networks on the adoption of a new technology in the form of VoIP. The introduction of packet-switched telephony in the form of VoIP raises concerns about current regulatory practice of�access, which�has been designed for traditional telephony on PSTN networks. In particular, we show that with endogenous consumer choice between PSTN and VoIP telephony, higher prices for terminating access to the PSTN network make VoIP less likely to succeed and lead to lower profits of operators that offer VoIP telephony exclusively.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 109.

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Date of creation: Jul 2008
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Handle: RePEc:cpb:discus:109

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  1. Reiffen, David, 1998. "A Regulated Firm's Incentive to Discriminate: A Reevaluation and Extension of Weisman's Result," Journal of Regulatory Economics, Springer, vol. 14(1), pages 79-86, July.
  2. Vives, Xavier, 2004. "Complementarities and Games: New Developments," CEPR Discussion Papers 4742, C.E.P.R. Discussion Papers.
  3. de Bijl, Paul W.J. & Peitz, Martin, 2005. "Local Loop Unbundling in Europe: Experience, Prospects and Policy Challenges," MPRA Paper 2441, University Library of Munich, Germany.
  4. M. Ali Khan, 2007. "Perfect Competition," PIDE-Working Papers 2007:15, Pakistan Institute of Development Economics.
  5. Paul de Bijl & M. Peitz, 2008. "Access Regulation and the Adoption of VoIP," CPB Discussion Paper 109, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Creating Competition through Interconnection: Theory and Practice," Journal of Regulatory Economics, Springer, vol. 10(3), pages 227-56, November.
  7. Armstrong, Mark & Vickers, John, 1998. "The Access Pricing Problem with Deregulation: A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 115-21, March.
  8. Vives, X., 1988. "Nash Equilibrium With Strategic Complementarities," UFAE and IAE Working Papers 107-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  9. Weisman, Dennis L, 1998. "The Incentive to Discriminate by a Vertically-Integrated Regulated Firm: A Reply," Journal of Regulatory Economics, Springer, vol. 14(1), pages 87-91, July.
  10. Foros, Oystein, 2004. "Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 1-24, January.
  11. Bijl, P.W.J. de & Peitz, M., 2004. "Unbundling the Local Loop: One-Way Access and Imperfect Competition," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2004-025, Tilburg University, Tilburg Law and Economic Center.
  12. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(448), pages 545-64, May.
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  14. Peitz, Martin & Valletti, Tommaso M. & Wright, Julian, 2004. "Competition in telecommunications: an introduction," Information Economics and Policy, Elsevier, vol. 16(3), pages 315-321, September.
  15. Manez, J.A. & Waterson, M., 2001. "Multiproduct Firms and Product Differentiation: a Survey," The Warwick Economics Research Paper Series (TWERPS) 594, University of Warwick, Department of Economics.
  16. Ebrill, Liam P. & Slutsky, Steven M., 1990. "Production efficiency and optimal pricing in intermediate-good regulated industries," International Journal of Industrial Organization, Elsevier, vol. 8(3), pages 417-442, September.
  17. Paul de Bijl & Martin Peitz, 2002. "New Competition in Telecommunications Markets: Regulatory Pricing Principles," CESifo Working Paper Series 678, CESifo Group Munich.
  18. Armstrong, M. & Doyle, C. & Vickers, J., 1995. "The access pricing problem: a synthesis," Discussion Paper Series In Economics And Econometrics 9532, Economics Division, School of Social Sciences, University of Southampton.
  19. Lewis, Tracy R. & Sappington, David E. M., 1999. "Access pricing with unregulated downstream competition," Information Economics and Policy, Elsevier, vol. 11(1), pages 73-100, March.
  20. Peitz, Martin, 2005. "Asymmetric access price regulation in telecommunications markets," European Economic Review, Elsevier, vol. 49(2), pages 341-358, February.
  21. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
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Citations

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Cited by:
  1. de Bijl, Paul W.J. & Peitz, Martin, 2010. "Regulatory legacy, VoIP adoption, and investment incentives," Telecommunications Policy, Elsevier, Elsevier, vol. 34(10), pages 596-605, November.
  2. Edmond Baranes, 2006. "Bundling and Collusion on Communications Markets," Working Papers 06-17, NET Institute, revised Oct 2006.
  3. Bijl, P.W.J. de & Peitz, M., 2006. "Access Regulation and the Adoption of VoIP," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2006-012, Tilburg University, Tilburg Law and Economic Center.
  4. Stühmeier, Torben, 2011. "Access regulation with asymmetric termination costs," DICE Discussion Papers 29, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  5. Stühmeier, Torben, 2010. "Fixed to VoIP Interconnection: Regulation with Asymmetric Termination Costs," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 34, International Telecommunications Society (ITS).
  6. Steffen Hoernig, Marc Bourreau, Carlo Cambini, 2014. "Fixed-Mobile Substitution and Termination Rates," FEUNL Working Paper Series wp588, Universidade Nova de Lisboa, Faculdade de Economia.
  7. Bipasa Datta & Yu-Shan Lo, 2013. "To Block or not to Block? Network Competition when Skype enters the Mobile Market," Discussion Papers 13/32, Department of Economics, University of York.
  8. Paul de Bijl & Martin Peitz, 2006. "Broadband Access in Europe: Challenges for Policy and Regulation," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 4(3), pages 10-15, October.

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