M2M Call Termination – Regulation or Competition?

Abstract

We review the recent literature on mobile termination rates (MTR) in mobile communication networks (M2M). This literature shows that mobile networks may have incentives to charge ine¢ cient high termination charges leading to reduced surplus for consumers and society, and therefore should be regulated. We discuss optimal regulation of MTRs and the two main objectives behind current regulation: excessive pricing and entry assistance. We also present a sketch of a new regulatory regime for the mobile industry.