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Roaming in the Mobile Internet

  • Fabrizi, Simona
  • Wertlen, Bruno

With the acquisition of UMTS licenses Mobile Operators (MOs), have often been obliged to deploy 3G network infrastructures covering at least a given percentage of users by a given date. This paper discusses the rationale for imposing these minimum coverage requirements by regulatory bodies. To that end, a model is built, which studies the incentives for MOs to compete for market share and over coverage within an unregulated environment where MOs are assumed to be free to enter sharing agreements and to negotiate a reciprocal roaming charge. Within this framework, it is first shown that MOs would deploy their infrastructure to guarantee the coverage of the entire territory (population), but they would avoid any network duplication in order to maximize rents from roaming revenues. It is then discussed whether a minimum coverage requirement is the best policy to reduce these excess rents, or whether alternative measures could be adopted which could serve other goals as well, such as the avoidance of network duplication.

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Article provided by Elsevier in its journal Telecommunications Policy.

Volume (Year): 32 (2008)
Issue (Month): 1 (February)
Pages: 50-61

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Handle: RePEc:eee:telpol:v:32:y:2008:i:1:p:50-61
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  1. Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Monash Economics Working Papers archive-45, Monash University, Department of Economics.
  2. van Damme, Eric, 2002. "The European UMTS-auctions," European Economic Review, Elsevier, vol. 46(4-5), pages 846-858, May.
  3. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Series Working Papers 2004-W09, University of Oxford, Department of Economics.
  4. Ken Binmore & Paul Klemperer, 2001. "The Biggest Auction Ever: the Sale of the British 3G Telecom Licenses," Economics Papers 2002-W4, Economics Group, Nuffield College, University of Oxford, revised 01 Sep 2001.
  5. Cambini, Carlo & Valletti, Tommaso, 2003. "Investments and Network Competition," CEPR Discussion Papers 3829, C.E.P.R. Discussion Papers.
  6. Laffont, Jean-Jacques & Marcus, Scott & Rey, Patrick & Tirole, Jean, 2003. " Internet Interconnection and the Off-Net-Cost Pricing Principle," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 370-90, Summer.
  7. Sutherland, Ewan, 2001. "International roaming charges: over-charging and competition law," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 5-20, February.
  8. Paul Klemperer, 2004. "Introduction to Auctions: Theory and Practice
    [Auctions: Theory and Practice]
    ," Introductory Chapters, Princeton University Press.
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