International telephone traffic, callback and policy implications

Jonathan Sandbach

Telecommunications Policy, 1996, vol. 20, issue 7, 507-515

Abstract: This paper uses an origin/destination model of international traffic flows, incorporating linear and non-linear price variables, to identify the impact of callback arbitrage opportunities on traffic flows. The model also incorporates a number of structural drivers of international telephone traffic that are of interest in themselves. The conclusion is that there is some evidence for the effect of callback when (and only when) arbitrage opportunities on a route exceed a certain threshold (about US$0.90 per minute). This would explain the considerable migration of traffic to callback operators in some countries with very high international call tariffs. However, the current Impact on Western European traffic is minimal. Furthermore, as the real price of international telephone calls falls, even current arbitrage opportunities will soon cease to be attractive to traditional callback operators.

Date: 1996
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