Binmore, Ken and Harbord, David (2005): Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator. Published in: Journal of Competition Law and Economics , Vol. 1, No. 3 (September 2005): pp. 449-472.
Preview |
PDF
MPRA_paper_3248.pdf Download (323kB) | Preview |
Abstract
The conventional wisdom that mobile operators are able to act as monopolists in pricing call termination on their networks has recently been challenged by Hutchison 3G’s entry into European mobile markets. The European Commission’s electronic communications regime allows national regulatory authorities to regulate mobile termination rates if an operator is found to possess “significant market power”. This requires that the mobile operator not be constrained by the "countervailing buyer power" of incumbents. The claim that incumbent operators possess countervailing buyer power has been repeatedly dismissed because of their obligation to interconnect with other networks. This conclusion is erroneous. We analyse bargaining over fixed-to-mobile termination rates and demonstrate that the existence of an interconnectivity obligation is entirely consistent with new entrants such as Hutchison 3G having no market power at all in pricing call termination on their own networks.
Item Type: | MPRA Paper |
---|---|
Original Title: | Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator |
Language: | English |
Keywords: | Bargaining; countervailing buyer power; regulation; telecommunications |
Subjects: | D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation K - Law and Economics > K2 - Regulation and Business Law > K23 - Regulated Industries and Administrative Law |
Item ID: | 3248 |
Depositing User: | David Harbord |
Date Deposited: | 16 May 2007 |
Last Modified: | 27 Sep 2019 09:57 |
References: | M. Armstrong, “Network Interconnection in Telecommunications,” (1998) Economic Journal, 108(448), 545-564. M. Armstrong, “Call Termination in Mobile Networks,” (2001) Nuffield College, Oxford. M. Armstrong, “The Theory of Access Pricing and Interconnection,” in M. Cave, S. Majumdar and I. Vogelsang (eds.) (2002) Handbook of Telecommunications Economics, North-Holland. K. Binmore, Fun and Games: A Text on Game Theory (1992) D.C. Heath and Company. K. Binmore, A. Rubinstein and A. Wolinsky, “The Nash Bargaining Solution in Economic Modelling” (1986) 17 Rand Journal of Economics, 176-188. M. Carter and J. Wright, “Interconnection in Network Industries,” (2002) Review of Industrial Organization, 14, 1-25. Competition Commission Vodafone, O2, Orange and T-Mobile (2003), London. R. W. Crandall and J. G. Sidak, “Should Regulators Set Rates to Terminate Calls on Mobile Networks?” (2004) 21 Yale Journal on Regulation. J. Gans and S. King, “Mobile Network Competition, Customer Ignorance, and Fixed-to-Mobile Call Prices,” 2000, Information Economics and Policy, 12(4), pp. 301-328. J-J Laffont, P. Rey and J. Tirole “Network Competition: Overview and Nondiscriminatory Pricing,” (1998) Rand Journal of Economics, 29(1), pp. 1-37. A. Muthoo, Bargaining Theory With Applications (1999) Cambridge University Press. Office of Communications (Ofcom), Termination Charges in the Absence of Regulation, (2002), London. Office of Communications (Ofcom ) Wholesale Mobile Voice Call Termination: Statement, 1 June 2004, London. M. Osborne and A. Rubinstein, Bargaining and Markets (1990) Academic Press, San Diego. P. Rey and B. Julien, “Mobile to Mobile Call Termination,” in Regulating Mobile Call Termination (2004) Vodafone Policy Paper Series, Number 1. J. Wright, “Access Pricing under Competition: An Application to Cellular Networks,” (2002) Journal of Industrial Economics, 50, 289-315. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/3248 |
Available Versions of this Item
- Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator. (deposited 16 May 2007) [Currently Displayed]