The U.S.’s call termination fee system appears to have generated ...

has been seconded to the European Commission (EC) since Feb. He stressed his paper -- Call Termination Fees : The U.S. in Global Perspective -- reflects his own opinions as a Transatlantic Fellow of the German Marshall Fund of the U.S., rather than those of the FCC or the EC. U.S. call termination rates tend to be symmetric and low, Marcus said, because the intercarrier compensation regime for local calls creates a presumption that local termination rates will be symmetric and based on the forward-looking costs of the incumbent wireline operators. Termination rates for local calls between wireless operators and between nonincumbent wireline companies aren’t regulated and are usually zero, he said. The trend toward zero marginal cost for domestic calls has prompted a migration to zero marginal retail price -- with wireless and now wireline operators offering “buckets of minutes” plans with no roaming or long distance charges. On the other hand, he said, Europe has high and asymmetric call termination fees, forcing fixed users to provide “large and arguably irrational subsidies” to mobile users. Pricier and unequal fees also contribute to European mobile average prices per min. of use (MoU) nearly twice comparable U.S. prices, though also low initial costs for mobile services, Marcus said. He said the differences in usage and price per MoU couldn’t be ascribed only to the U.S. regime in which cellular subscribers pay to receive calls. The paper examines the U.S. mobile market in the global context. Differences between the U.S. and Europe are most dramatic in that market, Marcus said. The European system has spurred faster adoption of mobile telephony while also depressing use of the phones. On the other hand, Marcus said, the U.S. system has meant slower uptake of mobile telephony but much higher usage of mobile phones. In a section on next steps for the European Union and the U.S., Marcus said the EC’s new regulatory framework for e- communications, which addresses call termination fees by listing markets potentially subject to ex ante regulation, is a logical approach. However, he said, it could lead to heavier-handed regulation unless European regulators authorities reduce regulatory asymmetries. While the U.S.’s call termination system isn’t creating a mobile termination problem, he said, intercarrier compensation regimes are “under significant stress due to increasing competition, differences in the prices of different forms of access, and technological and market convergence.” IP telephony is placing new strains on the system as well, he said. Both schemes will continue to face stress in the coming years, Marcus said, as Europe moves to more intensive regulation and the U.S. continues on its “generally regulatory trajectory.” The paper isn’t a “chest-thumping endorsement” of U.S. regulatory policy, he said, but the U.S. system seems to be working better than Europe’s -- “perhaps as much through dumb luck as through regulatory genius.”