Connecting Customers and Disconnecting Competitors

We see an intense debate whether the facility-based telecommunication firms should open up their networks to virtual operators. In this paper we argue that the conclusion depends on which type of business the virtual operator has. Some virtual operators will mainly reduce the revenue potential for the facility-based firm, while other virtual operator give rise to some extra profit that cannot be extracted to the facility-based firm's own downstream activities. Hence, there is no “one size fits all”-solution for the facility-based firm. However, the important issue is whether the facility-based firm has the opportunity to connect virtual operators that look like a new customer, while they disconnect virtual operators that constitute new rivals.