Discussion Papers

Cara Schwarz-Schilling, Ulrich Stumpf

Netzbetreiberportabilität im Mobilfunkmarkt Auswirkungen auf Wettbewerb und Verbraucherinteressen
Nr. 199 / Dezember 1999

Summary

Network operators are obliged to provide carrier portability according to Section 43 (5) of the German Telecommunications Law. Suspension by the regulator is possible for technical reasons or if the absence of portability does not significantly impair competition and affect consumer interests. Preparing decisions to come regarding this issue WIK has carried out a study for the regulator focusing on the question whether lack of carrier portability is significantly impairing competition in the mobile market and/or whether consumer interests are significantly affected.

The conclusions of the study can be summarized as follows:

 

  • The lack of carrier portability allows firms to gain market power by enabling them to charge an extra price margin corresponding to the switching cost.

 

  • The lack of carrier portability lowers competition intensity in particular for the installed base of business customers.

 

  • The lack of carrier portability reinforces first mover advantages.

 

 

  • The lack of carrier portability facilitates implicit collusion.

Therefore it can be concluded that lack of carrier portability significantly impairs competition in the German mobile market. Introduction of carrier portability would result in intensified competition and along with it lower prices and costs and/or a higher level of service quality and therefore lead to welfare gains. Furthermore the introduction of mobile number portability is in the consumers interest for the following reasons:

  • Those who would also switch without portability can avoid cost
  • Those who switch only with portability can take advantage of better services
  • All consumers gain from intensified competition
  • Calling parties can avoid search costs

The lower level of tariff transparency that is associated with carrier portability can largely be compensated by other means (advice of charge and/or dial tone signal). Disadvantages for consumers in this regard are more than compensated by the advantages of introducing carrier portability.

Section 2 of the German telecommunications law emphazises the protection of consumer interests as well as the assurance of fair and workable competition in telecommunication markets as primary aims of regulation. These aims correspond to the two main questions that have been raised in the study. The conclusions of the study are that competition and consumer interested are significantly impaired by the lack of carrier portability and it cannot therefore be suspended for these reasons.

Only German language version available.

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