Journal of Regulatory Economics

, Volume 35, Issue 2, pp 111–134 | Cite as

Access regulation and the adoption of VoIP

Original Article
First Online:

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.

Keywords

Telecommunications Voice over Internet protocol (VoIP) Entry Access Regulation Imperfect competition 

JEL Classifications

L96 L51 L13 
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Armstrong M.: Network interconnection in telecommunications. Economic Journal 108, 545–564 (1998)CrossRefGoogle Scholar
  2. Armstrong M.: The theory of access pricing and interconnection. In: Cave, M., Majumdar, S., Vogelsang, I.(eds) Handbook of telecommunications economics, North Holland, Amsterdam (2002)Google Scholar
  3. Armstrong M., Doyle C., Vickers J.: The access pricing problem: A synthesis. Journal of Industrial Economics 44, 131–150 (1996)CrossRefGoogle Scholar
  4. Armstrong M., Vickers J.: The access pricing problem with deregulation: A note. Journal of Industrial Economics 46, 115–121 (1998)Google Scholar
  5. De Bijl P.W.J., Peitz M.: New competition in telecommunications markets: Regulatory pricing principles. Ifo Studien 48, 27–52 (2002a)Google Scholar
  6. De Bijl P.W.J., Peitz M.: Regulation and entry into telecommunications markets. Cambridge University Press, Cambridge (UK) (2002b)Google Scholar
  7. De Bijl P.W.J., Peitz M.: Local loop unbundling in Europe: Experience, prospects and policy challenges. Communications and Strategies 57, 33–57 (2005)Google Scholar
  8. De Bijl, P. W. J., & Peitz, M. (2006). Access regulation and the adoption of VoIP. International University in Germany. Working Paper No. 43/2006. Available at SSRN:http://ssrn.com/abstract=905535.
  9. De Bijl P.W.J., Peitz M. (2007) Local loop unbundling: One-way access and imperfect competition. In: Dewenter R., Haucap J. (eds). Access pricing: Theory and practice (pp. 91–117). Elsevier Science.Google Scholar
  10. Ebrill L., Slutsky S.: Production efficiency and optimal pricing in intermediate-good regulated industries. International Journal of Industrial Organization 8, 417–442 (1990)CrossRefGoogle Scholar
  11. Foros O.: Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market. International Journal of Industrial Organization 22, 1–24 (2004)CrossRefGoogle Scholar
  12. Hansen, B. (2006). Termination rates and fixed-mobile substitution. Mimeo.Google Scholar
  13. Laffont J.-J., Rey P., Tirole J.: Network competition. Overview and nondiscriminatory pricing. RAND Journal of Economics 29, 1–37 (1998)CrossRefGoogle Scholar
  14. Laffont J.-J., Tirole J.: Access pricing and competition. European Economic Review 38, 1673–1710 (1994)CrossRefGoogle Scholar
  15. Laffont J.-J., Tirole J.: Creating competition through interconnection: Theory and practice. Journal of Regulatory Economics 10, 227–256 (1996)CrossRefGoogle Scholar
  16. Laffont J.-J., Tirole J.: Competition in telecommunications. MIT Press, Cambridge (MA) (2000)Google Scholar
  17. Lewis T.R., Sappington D.E.M.: Access pricing with unregulated downstream competition. Information Economics and Policy 11, 73–100 (1999)CrossRefGoogle Scholar
  18. Manez, J. A., & Waterson, M. (2001). Multiproduct firms and product differentiation. A survey. University of Warwick Working Paper, 594.Google Scholar
  19. Milgrom P., Roberts J.: Rationalizability, learning, and equilibrium in games with strategic complementarities. Econometrica 58, 1255–1277 (1990)CrossRefGoogle Scholar
  20. OECD. (2006). The policy implications of voice over internet protocol. Report to the Working Party on Telecommunication and Information Services Policies, DSTI/ICCP/TISP(2005)3/FINAL.Google Scholar
  21. Peitz M.: Asymmetric access price regulation in telecommunications markets. European Economic Review 49, 341–358 (2005)CrossRefGoogle Scholar
  22. Peitz M., Valletti T., Wright J.: Introduction: Special issue on competition in telecommunications. Information Economics and Policy 16, 315–321 (2004)CrossRefGoogle Scholar
  23. Reiffen D.: A regulated firm’s incentive to discriminate: A reevaluation and extension of Weisman’s result. Journal of Regulatory Economics 14, 79–86 (1998)CrossRefGoogle Scholar
  24. Vives X.: Nash equilibrium with strategic complementarities. Journal of Mathematical Economics 19, 305–321 (1990)CrossRefGoogle Scholar
  25. Vives X.: Complementarities and games: New developments. Journal of Economic Literature 43, 437–479 (2005)CrossRefGoogle Scholar
  26. Vogelsang I.: Price regulation of access to telecommunications networks. Journal of Economic Literature 41, 830–862 (2003)CrossRefGoogle Scholar
  27. Weisman D.L.: The incentive to discriminate by a vertically-integrated regulated firm: A reply. Journal of Regulatory Economics 14, 87–91 (1998)CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Department Competition & Regulation, CPB Netherlands Bureau for Economic Policy AnalysisDen HaagThe Netherlands
  2. 2.ENCORE Fellows NetworkAmsterdamThe Netherlands
  3. 3.TILECTilburg UniversityTilburgThe Netherlands
  4. 4.Department of EconomicsUniversity of MannheimMannheimGermany
  5. 5.CEPRLondonUK
  6. 6.CESifoMunichGermany
  7. 7.ENCOREAmsterdamThe Netherlands
  8. 8.ZEWMannheimGermany

Personalised recommendations