Abstract
The aim of this paper is to assess the impacts of ex-ante asymmetric mobile termination rate regulation on ex-post market competition in the Europe’s mobile industry. Two regulatory instruments associated with the asymmetry between operators are implemented, namely glide path regulation and asymmetric regulation. The first regulatory device is to gradually decrease asymmetric treatment between mobile and fixed network operators while the second one is associated with asymmetric flexibility in setting MTRs between European mobile operators. With different model specifications, our study demonstrates that when the MTRs are regulated to lower levels, later entrants are likely to cut retail prices to gain more subscribers, and resulting in lower average national service prices. Furthermore, we find that asymmetric regulation plays a positive role on entrant penetration as well as the competitiveness of Europe’s mobile markets.
Highlights
The aim of this paper is to present empirical evidences on the regulatory success in promoting competition in the Europe’s mobile telephony sector via setting mobile termination rates (MTRs)
We investigated the impacts of European MTR regulation on entrant penetration
In the context of the Europe’s mobile sector, our study shows that competition for additional market shares was stronger when European National Regulatory Authorities (NRAs) required all mobile network operators (MNOs) to lower their MTRs
Summary
The aim of this paper is to present empirical evidences on the regulatory success in promoting competition in the Europe’s mobile telephony sector via setting mobile termination rates (MTRs). Glide path regulation is to gradually decrease asymmetric treatment between mobile and fixed network operators by lowering the MTR levels to costs of providing interconnection services. In its draft recommendation on termination rates, the European Commission [1] asserts that “setting a common approach based on an efficient cost standard and the application of symmetrical termination rates would benefit end-users in terms of lower retail prices”. To this end, European Regulatory Group proposed to fix MTRs at a symmetric rate calculated by a relevant National Regulatory Authorities (NRAs) [2]. An important issue for European regulators is to provide a complex analysis on whether glide path regulation might enhance competition across the Europe’s mobile markets
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