Roaming the Woods of Regulation: Public Intervention vs Firms Cooperation in the Wholesale International Roaming Market
AbstractDespite a general trend of lower charges for mobile calls, prices for international roaming calls have remained at levels surprisingly high. The apparent reluctance of European mobile network operators to lower roaming tariffs is generating many antitrust concerns. This paper discusses in a two country - two firm framework, the distortions associated with the functioning of the current system governing wholesale international roaming agreements based on Inter Operator Tariffs (IOTs) and the role played by cross border roaming alliances between foreign operators. We describe how competition between roaming operators at the wholesale level is influenced by the adoption of traffic redirection techniques. The paper shows that when mobile operators act un-cooperatively and traffic redirection techniques allow only partial control on traffic flows, competition between roaming operators may not guarantee a reduction in IOTs and, consequently, on retail tariffs. We propose a simple and effective regulatory price cap mechanism to restore efficiency in the wholesale market. When mobile operators cooperate within a cross border alliance, internal IOTs are set at cost and retail prices are lower.
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Bibliographic InfoPaper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0019.
Length: 28 pages
Date of creation: May 2006
Date of revision:
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-10 (All new papers)
- NEP-COM-2006-06-10 (Industrial Competition)
- NEP-CSE-2006-06-10 (Economics of Strategic Management)
- NEP-MIC-2006-06-10 (Microeconomics)
- NEP-NET-2006-06-10 (Network Economics)
- NEP-REG-2006-06-10 (Regulation)
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.:
- Sutherland, Ewan, 2001. "International roaming charges: over-charging and competition law," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 5-20, February.
- 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).
- Benno Bühler, 2009. "Do International Roaming Alliances Harm Consumers?," Working Papers 2009.93, Fondazione Eni Enrico Mattei.
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