Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator

Published as: "Bargaining Over Fixed-to-Mobile Termination Rates: Countervailing Buyer Power as a Constraint on Monopoly Power", Journal of Competition Law and Economics, Vol. 3, No. 1, pp. 44-472, 2005

28 Pages Posted: 25 May 2007

See all articles by Kenneth Binmore

Kenneth Binmore

University College London - Department of Economics

David Harbord

Market Analysis Ltd; Ferdescol.org

Abstract

The conventional wisdom that mobile operators are able to act as monopolists in pricing call termination on their networks has recently been challenged by Hutchison 3G's entry into European mobile markets. The European Commission's electronic communications regime allows national regulatory authorities to regulate mobile termination rates if an operator is found to possess "significant market power". This requires that the mobile operator not be constrained by the countervailing buyer power of incumbents. The claim that incumbent operators possess countervailing buyer power has been repeatedly dismissed because of their obligation to interconnect with other networks. This conclusion is erroneous. We analyse bargaining over fixed-to-mobile termination rates and demonstrate that the existence of an interconnectivity obligation is entirely consistent with new entrants such as Hutchison 3G having no market power at all in pricing call termination on their own networks.

Keywords: Bargaining, countervailing buyer power, regulation, telecommunications

JEL Classification: C78, D43, K23, L51

Suggested Citation

Binmore, Kenneth and Harbord, David, Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator. Available at SSRN: https://ssrn.com/abstract=988895

Kenneth Binmore

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7380 7804 (Phone)

David Harbord (Contact Author)

Market Analysis Ltd ( email )

34 Great Clarendon St
Oxford, OX26AT
United Kingdom

HOME PAGE: http://market-analysis.co.uk/

Ferdescol.org ( email )

Avenida 82 No. 10 – 62, Piso 6
Bogotá
Colombia

HOME PAGE: http://www.ferdescol.org/

Register to save articles to
your library

Register

Paper statistics

Downloads
137
Abstract Views
975
rank
210,349
PlumX Metrics