Series/Report no.:
21st European Regional Conference of the International Telecommunications Society (ITS): "Telecommunications at New Crossroads: Changing Value Configurations, User Roles, and Regulation", Copenhagen, Denmark, 13th-15th September 2010 No. 34
Abstract:
Typically, incumbent providers enjoy a demand-side advantage over any entrant. However, market entrants may enjoy a supply-side advantage in costs over the incumbent, since they are more efficient or operate on innovative technologies, such as the voice of internet protocol (VoIP) telephony. Regulation with a supply-side asymmetry has rarely been addressed. Considering both a supply-side and a demand- side asymmetry, the present model analyzes the effects different regulation regimes. Regulation may have adverse effects on subscribers, market shares, and profits. If providers can discriminate between on-net and off-net prices, asymmetric regulation has no local effect on market shares, independent of any demand- and supply-side asymmetry. Otherwise, with reciprocal termination charges, price discrimination leads to qualitatively same effects than nondiscriminatory pricing.