Termination charges and margin squeeze in the mobile telephony sector: Beware of misleading intuitions
Résumé
In recent publications and decisions, regulators and competition authorities repeatedly expressed their fear that the combination of mobile termination charges and on-net/off-net price discrimination in retail markets might allow a dominant mobile operator to hinder the development of smaller competitors. However, many of the intuitions underlying this fear are misguided. A proper assessment should take into consideration a broad set of complex economic mechanisms and should not be based on any systematic presumption. In particular, squeeze tests should take into account the actual functioning of competition in mobile telephony and should not be too narrow, lest they be devoid of any economic significance.