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Fair Cost Sharing: Big techs vs Telcos

Author

Listed:
  • Bruno Jullien

    (TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Matthieu Bouvard

    (TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

We study a cost-sharing mechanism where a content provider contributes to covering the costs incurred by a network operator when delivering content to consumers. The cost- share not only boosts the content provider's incentives to moderate traffic but also affects the price composition for consumers buying access and content. We show the overall effect on consumer welfare depends on the content provider's ability to monetize users. When that ability is high, introducing a cost-share can lead to lower overall prices and higher consumer welfare. We study the robustness of this result to long-term investments in cost reduction by the operator and to heterogeneity in consumers' taste for content. In extensions with multiple contents and multiple operators, contractual externalities arise that suggest a role for regulation.

Suggested Citation

  • Bruno Jullien & Matthieu Bouvard, 2023. "Fair Cost Sharing: Big techs vs Telcos," Working Papers hal-04282860, HAL.
    • Handle: RePEc:hal:wpaper:hal-04282860
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    Cited by:

    1. is not listed on IDEAS
    2. Jeanjean, François, 2024. "Creation and sharing of value in the telecoms sector. (How telecom operators' investments benefit content providers rather than themselves.)," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302486, International Telecommunications Society (ITS).
    3. Jeanjean, François, 2023. "Fair cost sharing in telecommunication industry, a virtuous circle," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 277978, International Telecommunications Society (ITS).
    4. Heid, Pascal & Remmy, Kevin & Reynaert, Mathias, 2024. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," TSE Working Papers 24-1589, Toulouse School of Economics (TSE), revised May 2026.
    5. Edmond Baranes & Cuong Hung Vuong, 2023. "Economic contribution to the debate on cost sharing policy," Working Papers hal-04016762, HAL.
    6. Zennyo, Yusuke, 2024. "A model of mobile app and ad platform markets," International Journal of Industrial Organization, Elsevier, vol. 97(C).
    7. Pascal Heid & Kevin Remmy & Mathias Reynaert, 2026. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," CESifo Working Paper Series 12719, CESifo.
    8. repec:bon:boncrc:crctr224_2024_615 is not listed on IDEAS
    9. Poudou, Jean-Christophe & Sand-Zantman, Wilfried, 2023. "The environmental impact of Internet regulation," Information Economics and Policy, Elsevier, vol. 65(C).
    10. Samaké, Said-Nour, 2025. "Telcos and Big Tech: Value Creation or Destruction?," 33rd European Regional ITS Conference, Edinburgh, 2025: Digital innovation and transformation in uncertain times 331303, International Telecommunications Society (ITS), revised 2025.

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