مقاله انگلیسی رایگان در مورد استفاده استراتژیک از تماس های خارجی در بازارهای تلفن همراه – الزویر 2018

Recent models of network competition demonstrate the incentives for incumbent firms to reduce receiver benefits in an entrant’s network through excessive off-net pricing. Theoretical reasoning behind the role of call externalities in limiting the market share of smaller networks assumes that receiving a call contributes to consumer utility. This paper tests this critical assumption with stated-preference data elicited from subscribers of mobile telephony in Poland. Our findings show that receiver benefits are a significant driver of mobile operator choice. Thus by reducing the volume of outgoing calls, larger networks can limit customer base growth of smaller rivals. Regulatory options for mitigating this effect are discussed. The size of market share gained by introducing a common off-net markup is low: 1.7–2.8% depending on the market segment. However under symmetric termination rates, an entrant would increase its market share by 6.1–8.5% at the expense of incumbents. In case of Poland, this would shorten the catch-up period from eight to five years.

Introduction

Economic externalities play a significant role in network industries. Telecommunication services, for example, generate various types of external benefits for their users. By controlling the extent to which those benefits are internalized, network operators can increase profits and improve their own competitive position in the market. In this paper, we show this empirically, using data from mobile telephony market in Poland. More specifically, we investigate how incumbent operators can realistically use call externalities to slow down the market share growth of late entrants (primarily in user or SIM card metrics). We also contribute to the discussion on the effects of making mobile termination rates (MTRs) asymmetric. Such regulation has been widely applied in Europe with the aim being to provide support by improving late entrants’ revenues from interconnection. We show that in the presence of call externalities, asymmetric MTR could also have a negative effect on a small network, slowing down its market share growth. The two primary sources of economic externalities in mobile telephony, are call and network benefits. Network externality is a well-known phenomenon which arises among subscribers of the same network. In this case the external benefit takes the form of savings from cheaper on-net calls.2 On the other hand call externalities are an example of benefits generated in one network for subscribers of rival providers. They arise because telecommunication services generate two-sided benefits. For example, when a voice connection is established, not only the calling party but also the receiving party derives some positive utility. Under the calling-party-pays (CCP) regime, receiver benefits turn into a positive economic externality, which remains under the control of the call originating operator. In the presence of both types of externalities networks will typically implement the combination of a low on-net rate and an (excessively) high off-net rate to maximize the amount of network benefits available to a firm’s own consumers while minimizing receiver benefits available to current or potential clients of rival firms. Such discriminatory pricing strategies are a good example of how operators maintain control over both types of external benefits, to improve profitability and defend market share. Network effects have attracted the attention of researchers for almost three decades. There is a large body of theoretical literature and empirical evidence documenting their impact on consumer behavior and competition between providers in various network industries. Notably, in mobile telephony networks, externalities have incentivized incumbent operators to exercise termination-based price differentiation, which has raised some antitrust concerns.3 In contrast, call externalities entered the economic research agenda later, after the wave of late entry that took place in several European countries as a result of 3 G licensing in 2001–2002. The interest in call externalities arose because of similar antitrust concerns related to the effects of price discrimination on the competitive position of late entrants. In a nutshell the reasoning points to a motivation to increase off-net prices in order to reduce receiver benefits for subscribers of rival operators.