Intense Network Competition

We analyse competition between perfectly substitutable networks. Monopolization can be sustained in equilibrium by asymmetric access prices whereby entry is deterred by a set of margin squeezes. A regulatory package consisting of (i) mandatory interconnection; (ii) reciprocal access prices; (iii) a ban on price discrimination between calls inside (on-net) and calls between (off-net) networks is shown to restore competition. This regulation requires neither demand data nor information about call costs