The Mobile Telecommunications Industry: The Competition under the Hypothesis of Price Discrimination Strategy

In the telecommunications industry, mobile telephony plays an important rule, since it is the sector with a high technological growth rate. The main factors that have been characterizing the mobile telephony industry during the last years are an exponential growth of traffic demand and the evolution from a market monopoly to full competition with the consequent growth of competitive pressure. We aim to describe the complex competitive environment of network interconnection in the mobile telecommunications market. In particular, we analyze the strategy of price discrimination based on the possibility for the mobile networks to set different retail prices with regard to calls made on-net or off-net. This strategy can involve a different impact on profit and on market share due to several variables, such as the brand loyalty, the demand elasticity of consumers and the degree of substitutability among networks.