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Fixed-Mobile Integration

By  |  May 24, 2013

Posted by D. Daniel Sokol

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    Steffen Hoernig (Nova School of Business and Economics, Lisbon, Portugal), Marc Bourreau (Telecom ParisTech, Department of Economics and Social Sciences), and Carlo Cambini (Politecnico di Torino, DIGEP) analyze Fixed-Mobile Integration

    ABSTRACT: Often, fixed-line incumbents also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation and even allows to maintain some of the efficiency gains.