TY - JOUR
T1 - Fixed-mobile substitution and termination rates
AU - Hoernig, Steffen
AU - Bourreau, Marc
AU - Cambini, Carlo
PY - 2015/1/1
Y1 - 2015/1/1
N2 - This paper studies the effect of termination rates on the observed substitution between fixed and mobile calls and access, in a model where consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect, and lowers subscriptions to the other service, via a cost effect. The prevailing asymmetric regulation, with very low fixed and higher mobile termination rates, tends to have implemented the optimal fee structure. However, the interests of the mobile operators and of the different customer groups did not coincide, and this fee structure may have reduced overall market participation.
AB - This paper studies the effect of termination rates on the observed substitution between fixed and mobile calls and access, in a model where consumers can subscribe to one or both types of offers. Simulations show that each (fixed or mobile) termination rate has a positive effect on the take-up of the corresponding service, via the waterbed effect, and lowers subscriptions to the other service, via a cost effect. The prevailing asymmetric regulation, with very low fixed and higher mobile termination rates, tends to have implemented the optimal fee structure. However, the interests of the mobile operators and of the different customer groups did not coincide, and this fee structure may have reduced overall market participation.
KW - Fixed-mobile substitution
KW - Network competition
KW - Termination rates
UR - http://www.scopus.com/inward/record.url?scp=85027957840&partnerID=8YFLogxK
U2 - 10.1016/j.telpol.2014.12.005
DO - 10.1016/j.telpol.2014.12.005
M3 - Article
AN - SCOPUS:85027957840
SN - 0308-5961
VL - 39
SP - 65
EP - 76
JO - Telecommunications Policy
JF - Telecommunications Policy
IS - 1
ER -