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Fixed to VoIP Interconnection: Regulation with Asymmetric Termination Costs

  • Stühmeier, Torben

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.

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Paper provided by International Telecommunications Society (ITS) in its series 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation with number 34.

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Date of creation: 2010
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Handle: RePEc:zbw:itse10:34
Contact details of provider: Web page: http://www.itseurope.org/

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  1. Foros, Oystein, 2004. "Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 1-24, January.
  2. Paul de Bijl & M. Peitz, 2008. "Access Regulation and the Adoption of VoIP," CPB Discussion Paper 109, CPB Netherlands Bureau for Economic Policy Analysis.
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  7. Peitz, Martin, 2005. "Asymmetric access price regulation in telecommunications markets," European Economic Review, Elsevier, vol. 49(2), pages 341-358, February.
  8. Michael Carter & Julian Wright, 2003. "Asymmetric Network Interconnection," Review of Industrial Organization, Springer, vol. 22(1), pages 27-46, February.
  9. Harbord, David & Hoernig, Steffen, 2010. "Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger)," MPRA Paper 21515, University Library of Munich, Germany.
  10. repec:cup:cbooks:9780521066631 is not listed on IDEAS
  11. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
  12. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
  13. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer, vol. 14(1), pages 1-25, February.
  14. Hoernig, Steffen, 2010. "Competition Between Multiple Asymmetric Networks: Theory and Applications," CEPR Discussion Papers 8060, C.E.P.R. Discussion Papers.
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