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

David Harbord, Marco Pagnozzi
2008 Social Science Research Network  
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
more » ... national evidence in support of this conclusion. * This article is partly based on research undertaken for Hutchison 3G UK Ltd. The authors, however, are solely responsible for its contents and for the views expressed.
doi:10.2139/ssrn.1374851 fatcat:hzlvjospsfba3kyhl4qrop4fy4