Autore
Cambini, Carlo

Titolo
Network competition and integration
Periodico
International Center for Economics Research, Torino. ICER - Working papers series
Anno: 1999 - Fascicolo: 18 - Pagina iniziale: 1 - Pagina finale: 34

The telecommunications industry is now facing a new tendency toward vertical integration. Because of the several mergers and acquisition that are emerging worldwide, market structure of the telecommunications industry, and so the behaviour of telecommunications operators, is rapidly going to change. This paper analyses competition between vertically integrated telecommunications networks in a deregulated environment. Two local operators compete in linear tariff in the subscriber market; in addition, they are integrated downstream in the long distance sector where they face competition of other firms which need access to the local networks as an “essential” facility. A combination between a two-way and a one-way access problem is here analysed. The paper focuses on (anti)competitive behaviour of local operators in setting one-way interconnection charge to their networks for independent long distance operators. It is shown that, in a mature phase of the industry, presence of competition both in the local and in the long distance sectors leads to lower local and long distance tariffs and lower one-way access charges. Optimal solutions in case of separation between local and long distance sectors are also analysed and a comparison between the two cases is carried out. Finally, it is considered the asymmetric case in which only one of the two networks is vertically integrated and the strategic behaviour of the firms is pointed out.



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