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The impact of lower termination rates on consumer welfare

In May 2009, the European Commission published a methodology for setting mobile termination rates (MTRs) for the interconnection of calls between operators that could lead to a drastic reduction in MTRs. These proposals, which reflected US experience of low MTRs, were based on the assumption that cutting them would drive up usage and increase consumer welfare. Work carried out by Frontier Economics for a group of European mobile phone operators challenges this reasoning.

 

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