IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

The interconnection prices in telecomunications: from theory to practice

  • Joan Calzada

    ()

    (Universidad de Barcelona)

  • Francesc Trillas

    ()

    (Universidad Autónoma de Barcelona)

This paper evaluates the main measures that have been used to regulate the interconnection prices in the telecommunication sector. We show that many of the regulations that are applying the vast majority of countries have very little theoretical support, and we identify the restrictions that prevent a more efficient intervention in the sector. In order to conduct this research, we firstly review the results of the theoretical literature on one and two-ways interconnections and we explain the problems that the national regulatory agencies have had when introducing the lessons of the academic contributions in their regulations. Secondly, we analyse the cost orientated interconnection prices, which are at present the regulatory practices most widely used. We evaluate the efficiency of some versions of this mechanism and explain the efforts that are being made to improve it.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ief.es/documentos/recursos/publicaciones/revistas/hac_pub/173_Precios.pdf
Download Restriction: no

Article provided by IEF in its journal Hacienda Pública Española/Revista de Economía Pública.

Volume (Year): 173 (2005)
Issue (Month): 2 (June)
Pages: 85-125

as
in new window

Handle: RePEc:hpe:journl:y:2005:v:173:i:2:p:85-125
Contact details of provider: Postal: Avda. Cardenal Herrera Oria, 378, 28035 Madrid
Phone: 91-339.89.15
Fax: 91-339.89.64
Web page: http://www.ief.es
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Nicholas Economides & Giuseppe Lopomo & Glenn Woroch, 1997. "Strategic Commitments and the Principle of Reciprocity in Interconnection Pricing," Industrial Organization 9701001, EconWPA.
  2. Gual, Jordi & Trillas, Francesco, 2004. "Telecommunications Policies: Determinants and Impact," CEPR Discussion Papers 4578, C.E.P.R. Discussion Papers.
  3. Gianni De Fraja, . "Regulation and Access Pricing with Asymmetric Information," Discussion Papers 95/5, Department of Economics, University of York.
  4. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, June.
  5. Hahn, Jong-Hee, 2003. "Nonlinear pricing of telecommunications with call and network externalities," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 949-967, September.
  6. 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.
  7. Wright, Julian, 1999. "International Telecommunications, Settlement Rates, and the FCC," Journal of Regulatory Economics, Springer, vol. 15(3), pages 267-91, May.
  8. Chang, Hsihui & Koski, Heli & Majumdar, Sumit K., 0. "Regulation and investment behaviour in the telecommunications sector: policies and patterns in US and Europe," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 677-699, November.
  9. Gans, J.S. & King, S.P., 2000. "Mobile Network Competition, Customer Ignorance and Fixed-to-Mobile Call Prices," Department of Economics - Working Papers Series 734, The University of Melbourne.
  10. Fabrizi, Simona & Wertlen, Bruno, 2008. "Roaming in the Mobile Internet," Telecommunications Policy, Elsevier, vol. 32(1), pages 50-61, February.
  11. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February.
  12. de Bijl,Paul & Peitz,Martin, 2003. "Regulation and Entry into Telecommunications Markets," Cambridge Books, Cambridge University Press, number 9780521808378.
  13. Gans, Joshua S. & King, Stephen P., 2001. "Using 'bill and keep' interconnect arrangements to soften network competition," Economics Letters, Elsevier, vol. 71(3), pages 413-420, June.
  14. Cuthbertson, Keith & Dobbs, Ian M, 1996. "A Robust Methodology for Ramsey Pricing with an Application to UK Postal Services," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 229-47, September.
  15. Jean-Jacques Laffont, 2001. "Internet Interconnection and the Off-Net-Cost Pricing Principle," Theory workshop papers 357966000000000085, UCLA Department of Economics.
  16. Álvaro Busto & Alexander Galetovic, 2001. "Regulación por empresa eficiente: ¿quién es realmente usted?," Documentos de Trabajo 106, Centro de Economía Aplicada, Universidad de Chile.
  17. Clemenz, Gerhard, 1991. "Optimal Price-Cap Regulation," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 391-408, June.
  18. Weisman, Dennis L., 2001. "Access pricing and exclusionary behavior," Economics Letters, Elsevier, vol. 72(1), pages 121-126, July.
  19. Lapuerta, Carlos & Tye, William B., 1999. "Promoting effective competition through interconnection policy," Telecommunications Policy, Elsevier, vol. 23(2), pages 129-145, March.
  20. Armstrong, M., 1996. "Network interconnection," Discussion Paper Series In Economics And Econometrics 9625, Economics Division, School of Social Sciences, University of Southampton.
  21. repec:ebl:ecbull:v:12:y:2002:i:3:p:1-9 is not listed on IDEAS
  22. Wright, Julian, 2002. "Access Pricing under Competition: An Application to Cellular Networks," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 289-315, September.
  23. Valletti, Tommasso M., 1999. "The practice of access pricing : telecommunications in the United Kingdom," Policy Research Working Paper Series 2063, The World Bank.
  24. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
  25. Nicholas Economides, 2004. "US Telecommunications Today, October 2002," Industrial Organization 0407007, EconWPA.
  26. 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.
  27. Doyle, Chris & Smith, Jennifer C., 1998. "Market structure in mobile telecoms: qualified indirect access and the receiver pays principle," Information Economics and Policy, Elsevier, vol. 10(4), pages 471-488, December.
  28. Foros, Oystein & Kind, Hans Jarle & Sorgard, Lars, 2002. "Access Pricing, Quality Degradation, and Foreclosure in the Internet," Journal of Regulatory Economics, Springer, vol. 22(1), pages 59-83, July.
  29. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
  30. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
  31. Robin Mason & Tommaso M. Valletti, 2001. "Competition in Communication Networks: Pricing and Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 17(3), pages 389-415.
  32. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
  33. Armstrong, Mark, 2004. "Network interconnection with asymmetric networks and heterogeneous calling patterns," Information Economics and Policy, Elsevier, vol. 16(3), pages 375-390, September.
  34. Guthrie, Graeme & Small, John & Wright, Julian, 2006. "Pricing access: Forward-looking versus backward-looking cost rules," European Economic Review, Elsevier, vol. 50(7), pages 1767-1789, October.
  35. 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.
  36. Gans, Joshua S & Williams, Philip L, 1999. "Access Regulation and the Timing of Infrastructure Investment," The Economic Record, The Economic Society of Australia, vol. 75(229), pages 127-37, June.
  37. Mark Armstrong, 2001. "Access Pricing, Bypass, and Universal Service," American Economic Review, American Economic Association, vol. 91(2), pages 297-301, May.
  38. Sibley, David S. & Weisman, Dennis L., 1998. "Raising rivals' costs: The entry of an upstream monopolist into downstream markets," Information Economics and Policy, Elsevier, vol. 10(4), pages 451-470, December.
  39. Peitz, Martin, 2005. "Asymmetric access price regulation in telecommunications markets," European Economic Review, Elsevier, vol. 49(2), pages 341-358, February.
  40. Laffont, Jean-Jacques & Tirole, Jean, 1992. "Access Pricing and Competition," IDEI Working Papers 19, Institut d'Économie Industrielle (IDEI), Toulouse.
  41. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring.
  42. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
  43. Poletti, Stephen & Wright, Julian, 2004. "Network interconnection with participation constraints," Information Economics and Policy, Elsevier, vol. 16(3), pages 347-373, September.
  44. Weisman, Dennis L, 1995. "Regulation and the Vertically Integrated Firm: The Case of RBOC Entry into Interlata Long Distance," Journal of Regulatory Economics, Springer, vol. 8(3), pages 249-66, November.
  45. Cave, Martin, 1997. "From cost plus determinations to a network price cap," Information Economics and Policy, Elsevier, vol. 9(2), pages 151-160, June.
  46. Little, Iain & Wright, Julian, 2000. "Peering and Settlement in the Internet: An Economic Analysis," Journal of Regulatory Economics, Springer, vol. 18(2), pages 151-73, September.
  47. Valletti, Tommaso M., 0. "The theory of access pricing and its linkage with investment incentives," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 659-675, November.
  48. Heyes, Anthony G. & Liston-Heyes, Catherine, 1998. "Price-cap regulation and technical change," Journal of Public Economics, Elsevier, vol. 68(1), pages 137-151, April.
  49. Economides, Nicholas, 1998. "The incentive for non-price discrimination by an input monopolist," International Journal of Industrial Organization, Elsevier, vol. 16(3), pages 271-284, May.
  50. 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.
  51. Michael Carter & Julian Wright, 2003. "Asymmetric Network Interconnection," Review of Industrial Organization, Springer, vol. 22(1), pages 27-46, February.
  52. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, June.
  53. Joan Calzada Aymerich, 2003. "Access by Capacity and Peak-Load Pricing," Working Papers in Economics 108, Universitat de Barcelona. Espai de Recerca en Economia.
  54. Uri, Noel D., 2001. "Monopoly power and the problem of CLEC access charges," Telecommunications Policy, Elsevier, vol. 25(8-9), pages 611-623, September.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hpe:journl:y:2005:v:173:i:2:p:85-125. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ana Belén Miquel Burgos)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.