Roaming in the Mobile Internet: when coverage sharing agreements call for regulation

Revised: 2006-06

We examine competition in Mobile Internet services, when operators bargain over the coverage sharing and their reciprocal roaming charge. Results show that in equilibrium operators cover the overall territory entirely and no-duplication is chosen, no matter how their bargaining power is distributed: operators have aligned incentives to enjoy roaming revenues extra-rents. Only their relative stand-alone coverage and, therefore, their appropriation of these rents, can be affected by how bargaining power is distributed. We finally discuss the scope for regulatory intervention to reduce these rents in the forms of minimum coverage requirements, or control over the level of reciprocal roaming charges.