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Ireland: Mobile termination H3GI January 12, 2007

Posted by Jasper in Mobile, Regulation.
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The Irish regulator ComReg is consulting on wholesale voice call termination on Hutchison 3G Ireland’s mobile network, releasing a consultation paper yesterday.

The interesting thing about this consultation is that reference is made to a bargaining model by Binmore and Harbord (BH).  This model emphasises the bargaining dynamic when operators set termination rates. While considerations of countervailing buying power and the like have been considered in mobile termination consultations before this would appear to be the first time that bargaining has been considered more formally by a regualtor.

ComReg has a number of reservations about the model, their principal being that its predicted outcomes do not fit the empirical evidence. The BH model predicts that H3GI would achieve termination rates equal to the average of the lowest termination rates in the market, this has not happened, as H3GI’s rates are above the levels in the overall mobile market. The BH model also predicts that in a situation of regulatory intervention stemming from the interconnectivity obligation and dispute resolution that H3GI’s bargaining power would be increased but that termination rates would remain around the average of the 2G operator rates. Again, this has not happened, H3GI’s rates are above the level in the overall mobile market.

I haven’t read the whole consultation document yet, but it certainly has a very different flavour than many other model termination consultations that nowadays more or less revolve around the same issues.

The consultation paper is available here.

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