Competition and Regulation in Wireless Services Markets
Consider a city where 3 commercial operators (companies) and one municipal operator offer WiFi Internet access to the citizens (users). The companies charge for their services and offer better rates than the municipal WiFi service which however is given gratis. Users with high needs will select one of the companies. However, if they are charged with high prices, or served with low rates, a portion of them will eventually migrate to the municipal network. In other words, the municipal service constitutes an alternative choice for the users and therefore sets the minimum requirements which the commercial providers should satisfy. Apparently, the existence of the municipal network affects both the user decisions and the operators pricing policy.