Mobile termination rates and the receiver-pays regime

Ángel Luis López

Information Economics and Policy, 2011, vol. 23, issue 2, 171-181

Abstract: The European Commission has recently invited national regulatory authorities to decrease access charges to the cost of an efficient operator. Some large operators warned regulators and users that cutting access charges could result in the US style business model, where mobile users pay for both making and receiving calls. I show that mobile operators charge for incoming calls when the access charge is below cost even if receivers can hang up. In such a case profits are neutral with respect to the level of the access charge. I further show that [`]bill and keep' is a constrained social optimum when the call externality is strong, even if receivers pay and can hang up. Finally, I discuss the policy implications of these results.

Keywords: Bill; and; keep; Call; externality; Mobile; telephony; Receiver; pays; Termination; rates (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:23:y:2011:i:2:p:171-181

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