<p>This paper may be of interest:</p>

<p>This paper examines the impact of regulatory intervention to cut termination rates of calls from fixed lines to mobile phones. Under quite general conditions of competition, theory suggests that lower termination charges will result in higher prices for mobile subscribers, a phenomenon known as the waterbed effect. The waterbed effect has long been hypothesized as a feature of many two-sided markets and especially the mobile telephony industry. Using a uniquely constructed panel of mobile operators’ prices and profit margins across more than twenty countries over six years, we document empirically the existence and magnitude of this effect. Our results suggest that although regulation reduced termination rates by about 10%, this also led to a 5% increase in mobile retail prices. We also provide evidence that both competition and market saturation, and most importantly their interaction, affect the overall impact of the waterbed effect on prices.</p>

<p>TESTING THE “WATERBED” EFFECT IN MOBILE TELEPHONY (<a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1542-4774.2011.01040.x/abstract" rel="nofollow">Genakos and Valletti (2011)</a>)</p>

CC BY-SA 3.0
2015-08-17T13:18:03.597Z
2015-08-17T13:18:03.597Z
BKay
<p>Can someone please explain or provide some useful link on factors affecting setting prices of mobile telephony services?</p>

CC BY-SA 3.0
2015-01-25T02:01:23.320Z
In general, we want to figure out the associated fixed and variable costs. How much does it cost to build cell phone towers, service them, provide customer service, etc?
jmbejara
<industrial-organisation><markets><price-theory>
Setting prices in mobile telephony
Quirik
# Setting prices in mobile telephony

(Asked by: username_0 on 2015-01-24)

Can someone please explain or provide some useful link on factors affecting setting prices of mobile telephony services?

**Tags:** industrial-organisation, markets, price-theory
> **Comments:**
> **username_1**: In general, we want to figure out the associated fixed and variable costs. How much does it cost to build cell phone towers, service them, provide customer service, etc?  

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## 1 answers

### Answer by username_2 on 2015-08-17. Score: 1

This paper may be of interest:

This paper examines the impact of regulatory intervention to cut termination rates of calls from fixed lines to mobile phones. Under quite general conditions of competition, theory suggests that lower termination charges will result in higher prices for mobile subscribers, a phenomenon known as the waterbed effect. The waterbed effect has long been hypothesized as a feature of many two-sided markets and especially the mobile telephony industry. Using a uniquely constructed panel of mobile operators’ prices and profit margins across more than twenty countries over six years, we document empirically the existence and magnitude of this effect. Our results suggest that although regulation reduced termination rates by about 10%, this also led to a 5% increase in mobile retail prices. We also provide evidence that both competition and market saturation, and most importantly their interaction, affect the overall impact of the waterbed effect on prices.

TESTING THE “WATERBED” EFFECT IN MOBILE TELEPHONY ([Genakos and Valletti (2011)](http://onlinelibrary.wiley.com/doi/10.1111/j.1542-4774.2011.01040.x/abstract))


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