Seesaw in the air: Interconnection regulation and the structure of mobile tariffs

► We examine the impact of regularly intervention to cut termination rates of calls to mobile phones. ► We find the existence of a “waterbed effect” for mobile customers. ► This effect is diluted for pre-paid cards, as cuts also limited “raise-each-other's-cost” strategies. ► The waterbed effect is strongest for consumers with post-paid subscription contracts.