Royal Economic Society:
Media Briefings - Mobile phone charges: New evidence of consumer benefits from termination rate regulation
1 August 2015
Telecoms regulators can now be confident that their market interventions to reduce mobile operators' prices for connecting calls - so-called termination charges - will benefit consumers. That is the central conclusion of research by Christos Genakos and Tommaso Valletti, published in the August 2015 issue of the Economic Journal. An earlier study by these economists detected a 'waterbed' effect, in which price caps on termination charges led to significant price increases for mobile phone subscribers. But with mobile penetration very high these days and mobile-to-mobile traffic far exceeding fixed-to-mobile traffic, the new study finds that regulators should no longer worry about possibly adverse consequences of regulatory cuts on what customers end up paying. Nor is there any strong indication that cuts have weakened mobile operators’ ability to compete by making new investments.
This press release was published online by the Royal Economic Society on August 1, 2015
Link to article here
Related publications
Evaluating a Decade of Mobile Termination Rate Regulation, Christos Genakos and Tommaso Valletti, The Economic Journal, Volume 125, Issue 586, August 2015
'Testing the 'Waterbed' Effect in Mobile Telephony', Christos Genakos and Tommaso Valletti, Centre for Economic Performance Discussion Paper No.827, October 2007
Related links
Christos Genakos webpage
Productivity and Innovation Programme webpage