Munich Personal RePEc Archive

Mobile Call Termination

Armstrong, Mark and Wright, Julian (2007): Mobile Call Termination.

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Motivated by recent UK experience, we study the problem of mobile call termination. This is an intriguing policy story, in which regulation has been imposed on what appears to be a competitive industry. We introduce a framework which integrates two existing literatures: one analyzing fixed-to-mobile call termination (where the predicted market failure involves the termination charge being set at the monopoly level), and one analyzing mobile-to-mobile network interconnection (where the predicted termination charge is below the efficient level). Our unified framework allows us to consider the impact of wholesale arbitrage and demand-side substitution. With these features, we find the unregulated termination charge lies between the efficient and the monopoly benchmarks. There remains a rationale for regulation, albeit reduced relative to the earlier literature.

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