Fixed to VoIP Interconnection: Regulation with Asymmetric Termination Costs

Torben Stühmeier
Authors registered in the RePEc Author Service: Torben Stuehmeier

No 34, 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation from International Telecommunications Society (ITS)

Abstract: 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.

Keywords: Termination charges; Interconnection; Regulation; Price Discrimination; Voice over Internet Protocol (VoIP) (search for similar items in EconPapers)
JEL-codes: L13 L51 L96 (search for similar items in EconPapers)
Date: 2010
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