Capacity-based versus time-based access charges in telecommunications |
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Authors: | Joan Calzada |
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Institution: | (1) Departament de Politica Economica, Universitat de Barcelona and GPRE-IREA, Av. Diagonal, 690, Barcelona, 08034, Spain |
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Abstract: | The Spanish telecommunications regulator recently introduced a capacity-based access system. Under this regulation, entrants
pay a flat charge for the interconnection circuits leased to the incumbent operator and are able to freely use these circuits
to provide telecommunications services. This paper determines the optimal capacity-based access charge in the presence of
time varying demand and capacity constraints and compares this regulation with the traditional time of use access system.
The analysis shows that either type of regulation allows the incumbent to recover its fixed costs and can promote the same
pattern of entry. Finally, the optimal capacity-based access charge when the entrant has market power is derived.
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Keywords: | Telecommunications Capacity-based access charges Peak-load pricing Network regulation |
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