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Interconnection in international telecommunications: An empirical investigation of United States settlement rates

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  • Madden, Gary
  • Savage, Scott J

Abstract

Several national governments have expressed concern at the inability of carriers to negotiate lower accounting rates. Ergas and Patterson (1991) and Frieden (1997) argue that it is only on bilateral markets with facilities-based competition at both ends that conditions favour accounting rates reductions. In the absence of facilities-based competition, Frieden also suggests that service providers, such as resellers, may provide a second best opportunity to place downward pressure on accounting rates. This study extends the work of Ergas and Patterson by developing an econometric model of settlement rate pricing. The model is estimated on data for 27 US bilateral telephone markets for the period 1985 to 1995. Parameter estimates are used to identify settlement rate determinants, and so highlight impediments to efficient international telecommunications pricing. A novel feature of the model is the inclusion of a resale market structure variable.

Suggested Citation

  • Madden, Gary & Savage, Scott J, 1998. "Interconnection in international telecommunications: An empirical investigation of United States settlement rates," Telecommunications Policy, Elsevier, vol. 22(11), pages 953-961, December.
    • Handle: RePEc:eee:telpol:v:22:y:1998:i:11:p:953-961
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    Cited by:

    1. Einhorn, Michael A., 2002. "International telephony: a review of the literature," Information Economics and Policy, Elsevier, vol. 14(1), pages 51-73, March.
    2. Francesco Castelli & José Luis Gómez Barroso & Claudio Leporelli, 2000. "Global Universal Service and International Settlement Reform," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 69(4), pages 679-694.

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