Mobile call termination

Journal article

We analyse charges levied by mobile telephone networks to deliver calls. We integrate two literatures: one analysing calls from the fixed network, where predicted unregulated termination charges are too high, and one analysing calls from rival mobile networks, where predicted charges are too low. In practice, however, networks adopt uniform charges for terminating both kinds of traffic, as do regulators. We show how incorporating wholesale arbitrage and demand-side substitution helps reconcile theory with practice. In our framework, the unregulated charge is uniform and typically lies between the efficient and monopoly benchmarks. There remains a rationale for regulation, albeit reduced.

Authors: Armstrong, M; Wright, J

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Blackwell Publishing
• Journal: Economic Journal
• Volume: 119
• Issue: 538
• Publication date: 2009-01-01
• DOI: 10.1111/j.1468-0297.2009.02276.x
• ISSN: 0013-0133
• Language: English