The Effects of Regulation Mobile Termination Rates for Asymmetric Networks

This paper examines mobile termination fees and their regulation when networks are asymmetric in size. It is demonstrated that with consumer ignorance about the exact termination rates (a) a mobile network's termination rate is the higher the smaller the network's size (as measured through its subscriber base) and (b) asymmetric regulation of only the larger operators in a market will, ceteris paribus, induce the smaller operators to increase their termination rates. The results are supported by empirical evidence using data on mobile termination rates from 48 European mobile operators from 2001 to 2003