On-net/ off-net differentials

It is becoming received wisdom amongst telecoms regulators that large mobile operators can use high off-net and low on-net pricing to protect themselves from competition from smaller rivals. It is odd that such a view is gaining currency, because there is little support for it from the academic literature on network pricing. Furthermore, it is not even clear that historically it has been the large rather than the small networks that have introduced these differentials. In this note we examine the arguments and try to explain in simple terms why on-net/off-net differentials and high M2M call termination charges do not obviously act to the advantage of larger networks as has been claimed.

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