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Pricing mechanism for interconnection between phone operators and virtual mobile VoIP operators

Author

Listed:
  • Masoud Asghari

    (Urmia University)

  • Saleh Yousefi

    (Urmia University)

Abstract

Lately software based virtual mobile voice over Internet Protocol (VMVoIP) services have become available to end-users which may endanger profit of regular telephone operators from phone calls. In this situation, telephone operators should decide on a proper mechanism for interconnection with such VMVoIP operators which secures mutual benefit of both operators. In this paper, we study both monopolistic and oligopolistic markets of VMVoIP in which a single VMVoIP and several VMVoIP operators available in the market respectively. We model the interaction among a phone operator, VMVoIP operators and end-users as a leader-follower dynamic game and find a sub-game perfect Nash equilibrium (SPNE) for the game. The SPNE shows the phone operator’s best pricing strategy (i.e., wholesale price for VMVoIP operators and retail price for end-users) and its best decision on the interconnection with VMVoIP operators. We further study economic interpretation of the SPNE. We show that in specific end-users’ demands, the phone operator may increase its total profit by allowing the interconnection and taking right price discrimination strategy.

Suggested Citation

  • Masoud Asghari & Saleh Yousefi, 2018. "Pricing mechanism for interconnection between phone operators and virtual mobile VoIP operators," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 67(1), pages 133-147, January.
    • Handle: RePEc:spr:telsys:v:67:y:2018:i:1:d:10.1007_s11235-017-0326-z
    DOI: 10.1007/s11235-017-0326-z
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    References listed on IDEAS

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    1. Bipasa Datta & Yu-Shan Lo, 2013. "To Block or not to Block? Network Competition when Skype enters the Mobile Market," Discussion Papers 13/32, Department of Economics, University of York.
    2. Paul Bijl & Martin Peitz, 2009. "Access regulation and the adoption of VoIP," Journal of Regulatory Economics, Springer, vol. 35(2), pages 111-134, April.
    3. Jörn Kruse, 2008. "Network Neutrality and Quality of Service," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 43(1), pages 25-30, January.
    Full references (including those not matched with items on IDEAS)

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