Open access policies, regulated charges and non-price discrimination in telecommunications

Open access policies in telecommunications, including interconnection and unbundling, are implemented by regulators in an effort to increase competition in the sector. Lack of cooperation from incumbents is pervasive, given their incentives to engage in non-price discrimination and the moral hazard resulting from the inability of regulators to monitor the contract. We build a relationship between the access price and non-price discrimination, neither assuming a pre-determined market strategic interdependence or a specific demand function format. When the access charge is liberalized, the incentive for non-price discrimination disappears. It may be optimal for the regulator to set a second-best regulated access price to avoid non-price discrimination.