Two-way access charges and on-net/ off-net differentials

This paper presents a discussion of two-way access charging in the context of mobile phone networks. I examine the determinants of access charges and price differentials between on-net and off-net tariffs. I consider the welfare implications of above-cost access charges and on-net/off-net differentials and the potential for larger networks to use high access charges as a means of foreclosing their markets. In doing so, for the first time, I compare the relative magnitude of the different effects identified in the literature so as to identify which effects are most important in driving MNOs behaviour. In addition I use a simulation model to extend the results so far presented in the literature to more complex combinations of factors, including on-net/off-net differentials in the presence of a variable consumer participation rate.

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