Abstract
The introduction of packet-switched telephony in the form of Voice over Internet Protocol (VoIP) raises concerns about current regulatory practice. Access regulation has been designed for traditional telephony on public networks (PSTN). In this paper we analyze the effect of access regulation and retail price regulation of PSTN networks on the adoption of a new technology in the form of VoIP. In particular, we show that with endogenous consumer choice between PSTN and VoIP telephony, higher prices for terminating access to the PSTN network make VoIP less likely to succeed and lead to lower profits of operators that offer exclusively VoIP telephony.
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