Mobile Call Termination

35 Pages Posted: 13 Sep 2007

See all articles by Mark Armstrong

Mark Armstrong

University College London - Department of Economics

Julian Wright

National University of Singapore (NUS) - Department of Economics

Date Written: September 2007

Abstract

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.

Keywords: telecommunications, access pricing, interconnection, competitive bottleneck

JEL Classification: L12, L41, L51, L96

Suggested Citation

Armstrong, Mark and Wright, Julian, Mobile Call Termination (September 2007). Available at SSRN: https://ssrn.com/abstract=1014322 or http://dx.doi.org/10.2139/ssrn.1014322

Mark Armstrong (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

Julian Wright

National University of Singapore (NUS) - Department of Economics ( email )

AS2 Level 6, 1 Arts Link
Singapore 117570
Singapore
6568743941 (Phone)
6567752646 (Fax)

HOME PAGE: http://profile.nus.edu.sg/fass/ecsjkdw/

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