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Industrial and Corporate Change, Volume 10, Number 1, pp. 247-265
© 2001 Oxford University Press

Regular Papers

Regulation and International Telecommunications Pricing Behaviour

Gary Madden and Scott J. Savage

Communications Economics Research Program, School of Economics and Finance, Curtin University of Technology, GPO Box U1987, Perth, Western Australia 6845
Interdisciplinary Telecommunications Program, University of Colorado at Boulder, Campus Box 530, Boulder, CO 80309-0530

Abstract

Recent technology change and market liberalization have substantially reduced the costs of providing international message telephone services (IMTS). However, the full extent of these cost reductions have generally not been reflected in lower prices. This paper reviews the recent literature on international telecommunications markets, and examines regulation and IMTS pricing behaviour. Particular attention is given to the accounting rate system (ARS), uniform settlement policies, and asymmetric competition. Several market behaviour scenarios are described where regulation has resulted in carriers implementing inefficient pricing rules for both accounting and collection rates. Finally, economic and political strategies are put forward that could supplant the current outmoded and uneconomic ARS, and bring about the full benefits of a freely functioning marketplace to telecommunications users.


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