Regulate or Deregulate: Influencing Network Interconnenction Charges

We study the choice between regulating interconnection charges or delegating their determination to the operators, both in a non-mature and a mature market. Three regulatory regimes are considered: full, cost-based and bill-and-keep. Delegation corresponds to bargaining about the interconnection charges using the regulatory schemes as disagreement outcomes.Applying regulation benefits the consumers.Under full regulation, access charges account for asymmetries and allow a unique Ramsey price.Delegation benefits the operators.In a mature market delegation robs the government of any market influence.In a non-mature market government preferences coincide with those of the largest operator and are disadvantageous for entry.