Economic Analysis of Pricing Methods of Telecom Services

Telecom industry plays an important role in national economic development because of its extensive external economic advantages; thus, it is very important to discuss the pricing methods of the telecom services. According to the economic analysis of the two circumstances of the telecommunications businesses, which is based on realizing the maximum of social welfare (from the standpoint of consumers) and realizing the maximum of profits (from the standpoint of telecom operators), this paper discusses the cost characteristics of the telecommunications businesses, and points out that the telecom operators pursuing the maximum of profit set higher prices than they do when pursuing the maximum of social welfare. This study shows that regulated, flexible discriminatory pricing based on two-part tariff is the development trend of telecom services, which is determined by the characteristics of the telecom services, competition, demand-price elasticity and other factors.