28 March 05: New Global Competition Law Centre Working Paper by Binmore and Harbord
The Global Competition Law Centre (GCLC), a research centre of the College of Europe, has published a new Working Paper entitled "Bargaining Over Fixed-to-Mobile Termination Rates in the Shadow of the Regulator" by Ken Binmore (University College London) and David Harbord (Market Analysis Ltd). The paper analyses the issue of fixed-to-mobile (F2M) termination when mobile and fixed operators bargain over termination rates.
The European Commission’s electronic communications regime allows national regulatory authorities (NRAs) to regulate F2M termination rates where the mobile operator is found to be enjoying a position of "Significant Market Power". For this, the mobile operator must not be constrained by the "countervailing buying power" of the incumbent fixed operators. Recently, several NRAs have dismissed the claim that fixed operators enjoyed a "countervailing buying power" because of their obligation to complete all calls irrespective of the terminating network. The authors demonstrate that this conclusion is erroneous. They explain how the modern economic theory of bargaining provides a better tool for assessing the relative bargaining power of the negotiating parties.
The Working Paper will be published in the Journal of Competition Law and Economics in June 2005, and may be downloaded in the Topical Articles section of our website or at http://gclc.coleurop.be.