Competition in a Pure World of Internet Telephony

19 Pages Posted: 18 Jan 2007

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: January 2007

Abstract

From the angle of competition policy, Voice over IP looks like a panacea. It not only brings better service, but it also increases competitive pressure on former telecommunications monopolists. This paper points to the largely overlooked downside. In a pure world of Internet telephony, there would be no charge for individual calls, nor for telephony, as distinct from other services running over the uniform network. Specifically, establishing property rights for either of these would be costly, whereas these property rights were automatic and free of charge in switched telephony. Giving voice over IP providers classic telephone numbers would enhance systems competition with switched telephony. But this would make it more difficult for clients to swap providers. The anti-competitive caller pays principle would extend to IP telephony.

Keywords: property right, non-linear pricing, pure bundling, club good, cross-subsidisation, packet switched telephony

JEL Classification: D23, D43, H41, K21, K23, L13, L15, L43, L86

Suggested Citation

Engel, Christoph, Competition in a Pure World of Internet Telephony (January 2007). MPI Collective Goods Preprint No. 2007/1, Available at SSRN: https://ssrn.com/abstract=957988 or http://dx.doi.org/10.2139/ssrn.957988

Christoph Engel (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

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Universität Osnabrück - Faculty of Law

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