The impact of regulation on the retail prices in fixed-line telephony across the European Union |
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Authors: | Lukasz Grzybowski |
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Affiliation: | Departamento de Fundamentos del Analisis Economico, Universidad de Alicante, Campus de San Vicente, 03080 Alicante, Spain |
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Abstract: | This paper estimates reduced-form models for incumbent prices in the fixed telecommunications industry using data for European Union (EU) countries from 1998 to 2002. The regulation of fixed-line telephony has a significant impact on prices for residential consumers. Liberalization of the telecommunications industry decreased retail prices by about 8.2%. The introduction of carrier pre-selection and number portability had a negative impact on price levels. The estimation results also suggest that a 1% decrease in termination charges on the incumbent network led on average to a 0.17% decrease in the cost of usage basket for residential consumers. Furthermore, in the pricing regressions for incumbent local and national calls at peak and off-peak times interconnection charges are significant only in the estimation of national peak prices. A 1% decrease in single transit interconnection charges on the incumbent network led to a 0.31% decrease in incumbent national prices at peak times, as calculated for the average prices in the EU in 2002. |
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Keywords: | Fixed-line telephony Regulatory policy Liberalization Interconnection charges Reduced-form model |
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