 Can a margin squeeze indicate the need for deregulation? The case of fixed network voice telephony marketsWolfgang Briglauer, Georg Götz and Anton Schwarz Telecommunications Policy, 2010, vol. 34, issue 10, 551-561 Abstract: In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower retail call prices. This was done by introducing wholesale regulation and promoting service-based competition. Some years later, the concern of some regulators turned from too high retail call prices to too low call prices, which might 'squeeze' entrants out of the market. This paper looks at a simple model in which this development is explained by increasing competitive pressure from an 'outside opportunity', most notably mobile telephony and cable. It is concluded that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and to increase market power but can also result from increased inter-modal competition. If this is the case, it is argued that the appropriate response would be deregulation or - under particular circumstances - a switch from cost-oriented access prices to alternatives such as retail-minus or capacity-based interconnection. Keywords: Access; regulation; Vertical; integration; Foreclosure; Price; squeeze; Telecommunications; Fixed; networks (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:telpol:v:34:y:2010:i:10:p:551-561 Ordering information: This journal article can be ordered from Access Statistics for this article Telecommunications Policy is currently edited by Erik Bohlin More articles in Telecommunications Policy from Elsevier |
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