The global telecommunications sector is undergoing major changes. A service that was once considered to be the sole purview of natural and often government -owned monopolies has been privatized and opened to competition, in response to both technological development and the failure of state-owned telecom entities to satisfy the growing telecommunications needs of users and economies. The advent of competition has been accompanied by the creation of National Regulatory Agencies, charged with the responsibility of facilitating market entry by new players, to guard against anti-competitive practices of incumbent monopoly operators, and ensuring that the benefits of competition are passed on to consumers.
All over the globe the introduction of competition in telecommunications has brought tremendous benefits to both consumers and operators. Competition provides consumers with greater choice of service operators, wider variety of services, significantly improved service quality, and more cost reflective tariffs. For developing countries, added benefits include the attraction of badly needed investment, faster network deployment, and wider consumer coverage. In addition, incumbents and other operators are given incentives to make improvements in their efficiency and to exploit opportunities for growth and innovation.
Interconnection is a necessary condition for effective competition since it enables
consumers of one network to be able to successfully complete a call to another
consumer or service irrespective of whose network the originator of the call is using or to whose network the call recipient or service provider is connected to. This is referred to as the any-to-any principle of interconnection This requires the interconnection of networks, for example, allowing a cellular customer to communicate not only with existing cellular subscribers but also with
the fixed line telephone customers of the incumbent operator and vice-versa. The necessary condition for effective competition is that entrants must not only have access to the incumbent's networks, but access must be on terms and conditions that are fair, non-discriminatory, and transparent.
Resources
- Papers and Links - Telecom Interconnection. An excellent resource provided by the World Bank. Provides a number of useful readings concerning the important but difficult issue of interconnecting multiple telecommunication companies. Notes that "interconnection is the single most important determinant of a successful transition from monopoly to competitive telecommunications markets."
- "Telecommunications Interconnection: A Literature Survey, Prepared for Asia
Pacific Economic Cooperation (APEC) Organization," by Julian K. Wright, Eric K. Ralph and D. Mark Kennet (2000). This is more than just a list of titles - it summarizes and comments on each of the many sources listed, both online and offline.
- "Setting Up Interconnection Regimes: References for Regulators," US Federal Communications Commission (FCC) (22 Nov 2002). This document provides a list of references designed for regulators in the midst of developing their interconnection regimes. The first section, "Significance of interconnection," offers general interconnection principles on which there is widespread agreement. The second section, "Regulatory Framework," offers links to interconnection rules of individual
countries. The third section lists some citations of interconnection agreements, some are reference
or model agreements, others are actual agreements in force. The fourth section offers links to information about interconnection prices.
- The British consulting firm Analysys surveyed
the pricing models used for telco/ISP
interconnection in European Union countries
in 2000. A summary of their report is online.
The call termination model, they found, was
the one most widely used, but the summary may
be more useful for describing the alternative
approaches (flat-rate, indirect, number
translation, etc.).
- A case study by the US Public Utilities
Research Council on interconnection pricing
in China (phone/phone and phone/internet)
is presented by Mark A. Jamison in "The
Interconnection Dispute," at the website of
Hong Kong's telecom agency. It's more about dispute resolution than economics.
- Oftel's November 2000 report on
their "Consultation on future interconnection
arrangements for dial-up Internet in the
United Kingdom" is very detailed.
- The OECD has prepared a comparative study of interconnection laws, which is available in PDF form at http://www.oecd.org/pdf/M00003000/M00003019.pdf By and large, it does not purport to choose which law is the best model, but it contrasts the approaches of several countries.
- One of the best discussions of interconnection principles can be found in Chapter 3 of the "Telecommunications Regulation Handbook" published by the infoDev program of the World Bank. Chapter 3 is online in PDF form at http://www.infodev.org/projects/314regulationhandbook/module3.pdf
- Two basic key documents on interconnection are the WTO Reference Paper and the 1997 EU Directive on Interconnection. The WTO Reference Paper is at http://www.wto.org/english/news_e/pres97_e/refpap-e.htm and the 1997 EU Directive is at http://europa.eu.int/eur-lex/en/lif/dat/1997/en_397L0033.html (In 2000, the EU proposed a new directive on access and interconnection, which is indexed at http://europa.eu.int/ISPO/infosoc/telecompolicy/review99/Welcome.html)
- Asia-Pacific Economic Cooperation (APEC) Telecommunications and Information Working Group materials on interconnection from 1999: http://www.apectelwg.org/apecdata/telwg/interTG/ATTZ2FG1.htm
- The ITU has published a report entitled Trends in Telecommunication Reform 2000-2001 "Interconnection Regulation" - 3rd edition, 2000. According to the blurb, it provides concrete examples of how regulators and policy makers around the globe have addressed these issues. Trends 2000-2001 also includes key interconnection reference materials - such as interconnection guidelines published by several regional regulatory organizations - and provides links to many other useful sources. Unfortunately, it is not online, but must be purchased from the ITU http://www.itu.int/publications/docs/trends2000.html
- Links to laws and policies of a number of countries can be found at: http://www.itu.int/ITU-D/treg/related-links/links-docs/interconnectlegisl.html but some of the links are outdated. The UK policy, for example, is now at http://www.oftel.gov.uk/publications/1999/competition/gii799.htm The German regulation is obtainable in PDF at http://www1.oecd.org/dsti/sti/it/cm/news/de.pdf
- The OECD has materials on the interconnection policies of its members at http://webnet1.oecd.org/oecd/pages/home/displaygeneral/0,3380,EN-document-41-1-no-no-5001-0,FF.html
- Here's an excerpt from the 1997 EU directive on interconnection:
"Notified operators shall meet reasonable requests for unbundled access to their local loops and related facilities, under transparent, fair and non-discriminatory conditions. Requests shall only be refused on the basis of objective criteria, relating to technical feasibility or the need to maintain network integrity. Where access is refused, the aggrieved party may submit the case to the dispute resolution procedure referred to in Article 4(5). Notified operators shall provide beneficiaries with facilities equivalent to those provided for their own services or to their associated companies, and with the same conditions and time-scales."
- The US interconnection statute is 47 United States Code Section 251 - it is fairly clear and detailed.
