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Traffic Management In Wholesale International Roaming: Towards A More Efficient Market?

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  • Paolo Lupi
  • Fabio M. Manenti

Abstract

Despite a general trend of lower charges for mobile calls, in Europe, prices for international roaming calls have remained at levels that are surprisingly high. The apparent reluctance of mobile network operators to lower roaming tariff is generating many antitrust concerns. This paper presents in a two‐country two‐firm framework the functioning of the current system governing wholesale international roaming agreements based on interoperator tariffs. The focus is on the role of traffic management; thanks to the emergence of traffic direction techniques, mobile network operators are allowed to select the roaming partner. We show that, unless these techniques do not allow for perfect control on traffic flows, traffic management does not improve the market's efficiency. In line with the regulatory mechanism recently adopted by the European Commission, we show that a simple price cap mechanism may restore partial efficiency in the wholesale market. We also show that although cross‐border cooperation at the wholesale level is Pareto efficient, it will not emerge as an equilibrium of a two‐sided matching game.

Suggested Citation

  • Paolo Lupi & Fabio M. Manenti, 2009. "Traffic Management In Wholesale International Roaming: Towards A More Efficient Market?," Bulletin of Economic Research, Wiley Blackwell, vol. 61(4), pages 379-407, October.
    • Handle: RePEc:bla:buecrs:v:61:y:2009:i:4:p:379-407
    DOI: 10.1111/j.1467-8586.2008.00298.x
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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. Giulia Canzian & Gianluca Mazzarella & Frank Verboven & Stefano Verzillo & Louis Ronchail, 2021. "Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation," CESifo Working Paper Series 9303, CESifo.
    3. Haucap Justus & Heimeshoff Ulrich & Stühmeier Torben, 2011. "Wettbewerb im deutschen Mobilfunkmarkt," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 60(2), pages 240-268, August.
    4. Benno Buehler, 2015. "Do International Roaming Alliances Harm Consumers?," Journal of Industrial Economics, Wiley Blackwell, vol. 63(4), pages 642-672, December.
    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. Tangerås, Thomas P. & Tåg, Joacim, 2016. "International network competition under national regulation," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 152-185.
    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).
    8. Morten Falch & Reza Tadayoni, 2014. "Regulation of international roaming data services within the EU," International Economics and Economic Policy, Springer, vol. 11(1), pages 81-95, February.
    9. 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.

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