On-Net/Off-Net Price Discrimination and 'Bill-and-Keep' vs. 'Cost-Based' Regulation of Mobile Termination Rates

David Harbord and Marco Pagnozzi

MPRA Paper from University Library of Munich, Germany

Abstract: This paper surveys the recent literature on competition between mobile network operators in the presence of call externalities and network effects. It shows that the regulation of mobile termination rates based on “long-run incremental costs” increases networks’ strategic incentives to inefficiently set high on-net/off-net price differentials, thus harming smaller networks and new entrants. The paper argues in favor of a “bill-and-keep” system for mobile-to-mobile termination, and presents international evidence in support of this conclusion.

Keywords: mobile termination; network effects; call externalities; bill-and-keep (search for similar items in EconPapers)
JEL-codes: D43 L51 L96 (search for similar items in EconPapers)
Date: 2008-01
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Citations: View citations in EconPapers (5)

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