Consumer outcomes and price differentiation in UK telecoms

There has been growing attention in UK telecoms to the issue of fairness. In particular, there has been concern regarding 'loyalty penalties' (that is, a reversion to standard prices when initial discounts expire).

This paper by Robert Kenny & Brian Williamson argues that consumer outcomes in UK telecoms have been very positive. Further, price differentiation (and initial discounts in particular) are an absolutely standard feature of many markets. In telecoms initial discounts have great value since they both enhance competition (by acting as a negative switching cost) and encourage adoption.

Highlights of the paper are available as a presentation.