Fixed-Mobile 'Intermodal' Competition in Telecommunications: Fact or Fiction?
11 Pages Posted: 22 Apr 2004
Date Written: March 31, 2004
The purpose of this Policy Bulletin is to determine whether wireline and wireless telephone services are close enough substitutes to be effective intermodal competitors. Using the standard tools of antitrust economics, this Policy Bulletin presents evidence indicating that wireless is not an effective intermodal competitor to wireline telephone service - at least to the extent that wireless offers a meaningful constraint on the market power of a wireline monopoly. The lack of effective intermodal competition between fixed and wireless telephony suggests that efforts to promote intramodal competition (e.g., unbundling mandates) remain necessary because consumer savings in wireline telephony since the passage of the Telecommunications Act of 1996 - which are estimated to exceed $10 billion annually - are likely the result of intramodal competition between wireline carriers.
Keywords: Intermodal competition, telecommunications, fixed-wireless, substitutability
JEL Classification: K23, K21, L10, L22, L5, L43, L50, L51, L52
Suggested Citation: Suggested Citation