Interconnection Agreements in the Telecom Business

Abstract

Interconnection is defined as commercial and technical arrangements under which service providers connect their equipment, networks and services to enable their customers to have access to the customers, services and networks of other service providers. This paper seeks to understand interconnection among telecommunication networks and the underlying issues related to interconnection. An attempt has been made to present findings based on country case studies done with the aim of identifying prevalent practices in interconnection in different countries. Care has been taken to have both developing as well as developed countries in the sample space that includes UK, Malaysia, USA, Finland, Australia, Brazil, China, Hong Kong, France, India, Mexico and Singapore. The transformation of the telecommunications market is occurring in several dimensions - in the changing structure of demand, in the convergence of services, and in the changing structure of the industry due to introduction of competition. Convergence between telecommunications, broadcasting, cable television, and the Internet has happened at a very rapid pace. Mobile telephony has become a substitute for fixed telephony in some countries. There has been a fundamental shift in the industry from monopolistic to a multi-operator environment. Resale of network services is also becoming an increasingly important business as separating network ownership from service delivery becomes operationally and commercially viable. Telecommunications is now clearly a multi-product sector with several alternative service delivery mechanisms that permit competition in service provision. Thus, the regulatory agenda has shifted from minimizing the price of subscribing to local telephone service or maintaining cross-subsidy to managing multiple issues related to competition, entry, pricing and cross-subsidies. In such a scenario, interconnection between networks and between different service providers assumes utmost importance.