Market Structure in Mobile Telecoms: Qualified Indirect Access and the Receiver Pays Principle

Abstract

Scarcity of spectrum limits the number of competing network operators in mobile telecoms. In the UK a regulatory review is currently enquiring into the effects of limited competition in the mobile market. The European Commission is also reviewing competition in roaming across mobile networks in Europe. In the UK the industry regulator Oftel claims that the prices for calling mobile phones are too high. We show that such relatively high prices stem from asymmetric incentives. The convention in the UK is for the originating party to pay for a telephone call. If instead the receiver were to apy for some or all of a call, we show that prices of calls to mobile would be lower. We also argue that qualified indirect access could stimulated moer effective competition in mobile telecoms.

Keywords: Mobile telecoms; Qualified indirect access; receiver pays principle; fixed-mobile integration

JEL Classification: D43, L51