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Empirical evidence on the relationship between mobile termination rates and firms’ profit

By  |  October 25, 2012

Posted by D. Daniel Sokol

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    Kjetil Andersson (University of Agder), Oystein Foros (NHH Norwegian School of Economics) and Bjorn Hansen (Telenor) offer Empirical evidence on the relationship between mobile termination rates and firms’ profit

    ABSTRACT: The comprehensive theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms’ profit. In a theoretical model, well suited for econometric implementation, we show that where consumers buy a bundle with included usage, as we now observe in the market, the level of MTRs has no impact on retail prices and firms’ profit. We use a panel data set from saturated European markets and find that an identical change in MTRs does not have a significant impact on firms’ profit.