Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Regulated Pricing for PSTN Termination on Non-Dominant Carriers

Regulated Pricing for PSTN Termination on Non-Dominant Carriers

Ratings: (0)|Views: 21|Likes:
Published by Core Research
Joshua Gans, 1999
Joshua Gans, 1999

More info:

Categories:Types, Research
Published by: Core Research on Jan 09, 2009
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/09/2014

pdf

text

original

12th December 1999
Regulated Pricing for PSTN Termination on Non -
Dominant Carriers
by
Joshua S. Gans
University of Melbourne
Executive Summary

This paper considers the issues involved in the regulation of termination services to non-dominant networks. These issues arise in an environment where one or more dominant networks (i.e., those with the greatest market shares) have regulated termination charges.

In the absence of regulation, non-dominant networks set:
\u2022
termination charges above the marginal cost of providing those services
regardless of the regulated termination charge on the dominant network.
\u2022
higher termination charges to regulated dominant networks than they set to
each other.
\u2022
higher termination charges, the lower the regulated termination charge of
dominant networks.

Given this, the case for regulation of non-dominant networks depends on the strength of substitution between services offered in the industry. If networks\u2019 customer bases are distinct (say because of differing technologies or coverage areas), then regulating all networks termination charges is unambiguously welfare improving. Specifically, regulating non-dominant networks termination charges will lower call prices by increase competition between them.

On the other hand, for networks wh ose services are closer substitutes, the case for regulation depends upon the market share of the non-dominant carrier. When a non- dominant network has a sizeable market share, regulation of its termination charge to the dominant network may reduce call prices overall. However, if a non-dominant network has a very low market share relative to the dominant network, regulating its termination charge may increase call prices.

This suggests that termination services of non-dominant networks should be regulated on similar terms to those of dominant networks; particularly as the latter become more established. This will result in more competitive call pricing.

Contents
Page
Decem ber 1999
i
1
Background.............................................................................1
2
Economic Characteristics of Termination.........................3
3
Unregulated Non-Dominant Networks............................5
4
Regulated Pricing...................................................................7
4.1
The Case for Regulation.................................................7
4.2
Benchmark Pricing for Termination...............................8
4.3
Pricing Options Given Dominant Firm Regulation.......9
5
Conclusion............................................................................ 11
References......................................................................................... 12

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->