by
JOSE-LUIS NEGRIN & CHARLES E. HYDE
FEBRUARY 2000
Department of Economics. University of Melbourne. Parkville Victoria 3052 Australia
The access price is the charge that a network manager charges to other firms to carry traffic (whether it initiates it or finalizes it) through the network. This charge has gained importance as the regulation of formerly vertically integrated monopolies in some industries has opened them, at least in non-network segments, to competition. The access price is the key instrument that allows the entrants and the incumbent to compete on a level playing field. This paper surveys the access pricing debate and reviews several regulatory experiences. At the theoretical level, the most relevant proposal has been the efficient component pricing rule (ECPR), which states that the access price should compensate the incumbent for its opportunity cost. Nevertheless, this rule could hamper competition in the downstream markets. At a practical level, the discussion has been centered on the inclusion of shared costs and social obligations in the access price. The international trend is towards the use of long run total service incremental cost as basis of the access price.
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