Competition, Cooperation, and Pricing: How Mobile Operators Respond to the Challenge of Over-The-Top

Considering the threats from OTT (Over-The-Top) services, this paper examines whether the mobile operator should charge OTT services access fees and how to. By using a dynamic-gaming process, we find that: 1) under non-cooperative strategy, the mobile operator would charge OTT a mobile Internet access fee, which is positively correlated to OTT platform’s future commercial value and the price of direct communication service, and negatively correlated to the indirect communication service price. 2) under cooperative strategy, the OTT service price that the joint venture charges end users is negatively correlated to OTT platform’s future commercial value. 3) despite choosing cooperative or non-cooperative strategy, the pricing of mobile operator’s direct communication service has a negative correlation with OTT platform’s future value and a positive correlation with the platform’s quality; while the pricing of the indirect communication service is positively correlated to platform’s future value and negatively correlated with the platform quality.

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