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Fixed to VoIP Interconnection: Regulation with Asymmetric Termination Costs

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  • Stühmeier, Torben

Abstract

Typically, incumbent providers enjoy a demand-side advantage over any entrant. However, market entrants may enjoy a supply-side advantage in costs over the incumbent, since they are more efficient or operate on innovative technologies, such as the voice of internet protocol (VoIP) telephony. Regulation with a supply-side asymmetry has rarely been addressed. Considering both a supply-side and a demand- side asymmetry, the present model analyzes the effects different regulation regimes. Regulation may have adverse effects on subscribers, market shares, and profits. If providers can discriminate between on-net and off-net prices, asymmetric regulation has no local effect on market shares, independent of any demand- and supply-side asymmetry. Otherwise, with reciprocal termination charges, price discrimination leads to qualitatively same effects than nondiscriminatory pricing.

Suggested Citation

  • Stühmeier, Torben, 2010. "Fixed to VoIP Interconnection: Regulation with Asymmetric Termination Costs," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 34, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse10:34
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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