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CEP discussion paper
Evaluating a Decade of Mobile Termination Rate Regulation
Christos Genakos and Tommaso Valletti
July 2014
Paper No' CEPDP1282:
Full Paper (pdf)
Data Files associated with this paper.

JEL Classification: D12; D43; L5; L96; L98

Tags: mobile telephony; termination rates; waterbed effect

We re-consider the impact that regulation of call termination on mobile phones has had on mobile customers’ bills. Using a large panel covering 27 countries, we find that the “waterbed” phenomenon, initially observed until early 2006, becomes insignificant on average over the 10-year period, 2002-2011. We argue that this is related to the changing nature of the industry, whereby mobile-to-mobile traffic now plays a much bigger role compared to fixed-to-mobile calls in earlier periods. Over the same decade, we find no evidence that regulation caused a reduction in mobile operators’ profits and investments.

Evaluating a Decade of Mobile Termination Rate Regulation, Christos Genakos and Tommaso Valletti, The Economic Journal, Volume 125, Issue 586, August 2015