Mobile Call Termination

We analyse charges levied by mobile telephone networks to deliver calls. We integrate literatures: one analysing calls from the fixed network, where predicted termination charges are too high, and one analysing calls from rival mobile, where predicted charges are too low. In practice, however, networks uniform charges for terminating both kinds of traffic, as do regulators. We show incorporating wholesale arbitrage and demand-side substitution helps reconcile with practice. In our framework, the unregulated charge is uniform and typically between the efficient and monopoly benchmarks. There remains a rationale regulation, albeit reduced.