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Fixed-mobile substitution and termination rates

Author

Listed:
  • Steffen Hoernig
  • Marc Bourreau

    (SES - Département Sciences Economiques et Sociales - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris, ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Carlo Cambini

    (Polito - Politecnico di Torino = Polytechnic of Turin)

Abstract

This paper studies the effect of termination rates on substitution between fixed and mobile calls and access, in a model where heterogeneous consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect, and lowers subscriptions to the other service, via a cost effect. The prevailing asymmetric regulation, with very low fixed and higher mobile termination rates, corresponds to the social optimum. However, the interests of the mobile operators and of the different customer groups do not coincide.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Steffen Hoernig & Marc Bourreau & Carlo Cambini, 2015. "Fixed-mobile substitution and termination rates," Post-Print hal-02085287, HAL.
    • Handle: RePEc:hal:journl:hal-02085287
    DOI: 10.1016/j.telpol.2014.12.005
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    Cited by:

    1. Marc Bourreau & Carlo Cambini & Steffen Hoernig, 2015. "Price distortion under fixed-mobile substitution," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 441-454, December.
    2. Steffen Hoernig & Marc Bourreau & Carlo Cambini, 2014. "Fixed-mobile integration," Journal of Regulatory Economics, Springer, vol. 45(1), pages 57-74, February.
    3. Lee, Dongyeol, 2015. "Regulating termination charges in asymmetric oligopolies," Information Economics and Policy, Elsevier, vol. 32(C), pages 16-28.
    4. Lukasz Grzybowski & Frank Verboven, 2016. "Substitution between fixed-line and mobile access: the role of complementarities," Journal of Regulatory Economics, Springer, vol. 49(2), pages 113-151, April.
    5. Mansi Kedia, 2019. "Testing the waterbed effect for India’s telecom industry," Indian Economic Review, Springer, vol. 54(1), pages 121-148, June.
    6. Rudra P. Pradhan & Mak B. Arvin & John H. Hall & Sara E. Bennett, 2018. "Mobile telephony, economic growth, financial development, foreign direct investment, and imports of ICT goods: the case of the G-20 countries," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(2), pages 279-310, June.
    7. Czajkowski, Mikołaj & Zawadzki, Wojciech & Bernatek, Grzegorz & Sobolewski, Maciej, 2024. "Assessing the substitutability of mobile and fixed internet: The impact of 5G services on consumer valuation and price elasticity," Telecommunications Policy, Elsevier, vol. 48(10).

    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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