Estimating mobile network externality surcharges in Korea

Abstract

This paper aims to estimate the network externality surcharges necessary for successfully internalising externalities in mobile telephony through mobile termination rates in Korea. We assume mobile call demand to be a log-linear function instead of a linear function, and redefine most parameters, such as the externality factor and degree of leakage, to maximise their relevance to the Korean context. The results show that the appropriate level of network externality surcharges in the Korean mobile network is less than one won. Consequently, our study proposes that the policy for promoting the addition of new users in saturated mobile networks does not produce significant results.