Cost Based Termination Access Charges in Mobile Sector: Some Considerations

Abstract

Mobile telecommunications is nowadays one of the most successful technological fields nowadays. Since its introduction in the global market in the last decade of the previous century, it became a very important contributor to the Gross Domestic Product (GDP) of developed and developing countries. In this market, a large number of powerful international telecommunications companies, often in harsh competition among them, are making huge investments, with the aim of achieving large revenues accordingly. The search for profit maximization and the legacy position of the former state-owned monopolistic companies may generate conflicts and unfair practices (e.g. abuse of monopolistic power, anticompetition strategies etc.). The National Regulatory Authorities (NRA) of the different countries have to arbitrate and establish market rules through regulatory processes. In this paper, the foundations of telecommunications regulation are reviewed, and the evolution of mobile call termination charges is studied for three countries with very different socioeconomic and politic situations. The Long Run Incremental Cost (LRIC) approach emerges as the method of choice to evaluate costs and appears to lead to quite similar results as markets enter the maturity stage.