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Ordinary two-part pricing introduces increasing returns to scale in the downstream competitive industry and therefore runs the risk of turning this industry into an oligopolistic or even monopolistic industry. Ordinary two-part pricing at the access level is therefore usually undesirable. Capacity-based access pricing, on the other hand, doesn’t have this drawback. Capacity-based access pricing involves the use of a two-part tariff. The marginal price for ACCESS PRICING IN TELECOMMUNICATIONS – ISBN 92-64-10592-1 – © OECD 2004 41 1.

Alternatively, if taxes on the monopolist’s and competitors’ final service are available instruments then access can be priced at marginal cost and taxes on final services can be set by the Ramsey method to meet the price constraint on the monopolist’s final service and the net revenue objective. If input proportions are fixed, and competitors cannot bypass the monopoly input, this approach is equivalent to the first with respect to the final service prices, the amount of access purchased, and the amount of revenue raised.

As discussed earlier, these conflicts might be resolved through a tax on final services. For example, a tax could be imposed on providers of certain final services (whether they purchase the corresponding inputs from the monopolist or not). , consumption level, date, time, place, and class) as is typically done in promulgating rates under regulation. , such that revenue is below standalone cost). Explicit taxes of this kind could be implemented in the form of a universalservice type fund. Such taxes and access charges can be “competitively neutral” with respect to monopolist and entrants alike so as not to artificially distort customer purchases.

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