On-net and off-net pricing on asymmetric telecommunications networks

Hoernig, Steffen

doi:10.1016/j.infoecopol.2007.01.004

Cited by 64 publications

(63 citation statements)

References 16 publications

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“…However, as intra network calls (so-called on-net calls) are often charged at a lower rate than inter-network calls (so-called off-net calls), there is less than full compatibility in an economic sense even though the networks are technically compatible. Put differently, the differentiation between on-net and off-net calls induces so-called tariff-mediated network effects (see Laffont, Rey and Tirole, 1998; Hoernig, 2007;. The magnitude of the onnet/off-net difference therefore determines the degree of economic (in-)compatibility and, thereby, also the degree of substitutability and competition between networks.…”

Section: Introductionmentioning

confidence: 99%

Consumer choice and local network effects in mobile telecommunications in Turkey

Karaçuka

Çatık

Haucap

2013

Telecommunications Policy

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Section: Introductionmentioning

confidence: 99%

Consumer choice and local network effects in mobile telecommunications in Turkey

Karaçuka

Çatık

Haucap

2013

Telecommunications Policy

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“…2. High termination charges induce on-net/off-net price differences that create barriers to entry and hinder growth of smaller networks, with larger price differences for larger than for smaller networks (DEGRABA 2003 andHOERNIG 2007). Modeling network competition with two-part tariffs and terminationbased price discrimination in the presence of call externalities BERGER (2005) shows that both the collusive and the welfare-maximizing access charges fall…”

Section: What Is the Efficient Price Level?mentioning

confidence: 99%

The Endgame of Telecommunications Policy? A Survey

Vogelsang

2013

Review of Economics

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Telecommunications policy has come a long way from regulation of vertically integrated monopolies to the current state of competition. As competition becomes selfsustainable, will telecommunications policy in the form of industry-specific regulation go away or, if not, what form will it take? The economics literature suggests that the regulatory efficiency frontier is shifted by new technological and market developments, such as convergence of networks, fixed-mobile substitution (and integration) and next generation access networks. The frontier is also affected by the existing capital stock and other physical and institutional characteristics of a country. The insights from a review of the theoretical and empirical literature are applied to five policy areas. They are: (1) termination monopoly; (2) local bottleneck access; (3) net neutrality; (4) spectrum management; and (5) universal service. While in some of them, deregulation and a move to competition policy will soon be the efficient state of the art, regulation will remain efficient in others for some time. Deregulation will likely become efficient for one-way access and universal service, with the exception of some universal service policies in remote areas and for the poor. Termination will move to bill and keep with a duty to interconnect. In addition, some (more symmetric) regulation should persist for net neutrality in the form of transparency requirements, (quasi-) common carrier obligations and minimum quality standards. Also, spectrum management, while moving towards full-blown ownership rights, will continue to see regulators providing zoning and other services, particularly for unlicensed spectrum. All these assessments are premised on the success of making additional spectrum as the key resource available. They are also premised on the absence of a killer technology like P2P FTTH that potentially dominates all other technologies. What determines the endgame in telecommunications regulation? Although technical and market developments will dominantly shape the regulatory efficiency frontier, institutional and political economy factors have an additional and mostly slowing effect on policy changes. (JEL: L43; L86; L96; L98.

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“…Hence, they do not address the main competition concern, namely whether on-net discounts can be used to foreclose the market or to preempt market entry. 3 This question is addressed by Hoernig (2007Hoernig ( , 2008. While the e¤ects depend on parameter constellations in his models, his papers show (a) that on-net price discounts can be used for anticompetitive purposes, but (b) that larger operators will also charge higher o¤-net prices in the absence of any anticompetitive intent.…”

Section: Related Literaturementioning

confidence: 99%

Consumer behavior towards on-net/off-net price differentiation

Haucap¹,

Heimeshoff²

2011

Telecommunications Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper explores how consumers react towards price di¤erenti-ation between on-net and o¤-net calls in mobile telecommunicationsa pricing policy that is common in many mobile telecommunications markets. Based on a survey of 1044 students we demonstrate that some consumers may su¤er from a "price di¤erentiation bias", i.e., a fair number of consumers may overestimate the savings that result from reduced on-net and/or o¤-net charges, as they do not appear to weigh the prices with the probabilities of placing o¤-net and on-net calls. This may help to explain why it have been the smaller operators in various countries who have introduced on-net/o¤-net price di¤er-entiation. We also discuss the implications that such a consumer bias may have for market competition. Terms of use: Documents inJEL Classi…cation: L40, L96.We would like to thank two anonymous referees as well as Ralf Dewenter and seminar participants at the Universities of Augsburg, Cologne, Kassel, and Wuerzburg and at the 17th Biennial Conference of the International Telecommunications Society (ITS) at Montreal for helpful comments and suggestions. Anja Brieger provided excellent research assistance.

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On-net and off-net pricing on asymmetric telecommunications networks

Cited by 64 publications

References 16 publications

Consumer choice and local network effects in mobile telecommunications in Turkey

Consumer choice and local network effects in mobile telecommunications in Turkey

The Endgame of Telecommunications Policy? A Survey

Consumer behavior towards on-net/off-net price differentiation

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