Regulators play a critical role in overseeing interconnection. In most cases, they must review relevant economic principles regarding interconnection pricing, analyse and propose interconnection costing approaches, develop common cost models to be utilized by all operators, and develop interconnection guidelines and regulations. Interconnection is often the most contentious regulatory issue given its fundamental impact on the overall operation of competing telecommunications networks. It is also one of the most important regulations to put in place before competition can be successfully introduced. To facilitate competition, regulators must ensure that the interconnection framework is clearly defined and that interconnection charges between networks are based on objective, economically sound, and solidly substantiated costs.
As with tariff regulation, before the market is fully competitive, interconnection regulation is generally applied asymmetrically on dominant versus non-dominant operators to ensure that non-dominant operators have access to interconnection services controlled by dominant operators. Generally, dominant operators are required to publish reference interconnection offers and interconnection agreements, which serve to inform and facilitate interconnection by new entrants and other non-dominant operators, and to discourage discriminatory behaviour by dominant operators in providing interconnection.
Investor concerns regarding interconnection regimes have grown steadily over the last five years due in large part, but not limited to, numerous problems encountered between mobile operators and fixed line service providers. In the early days of competition, regulators often have difficulty in establishing adequate interconnection guidelines for mobile-to-fixed and mobile-to-mobile calls. Many investors have suffered financially as a result and thus are more diligent about ensuring that the interconnection regime is economically sound and supported by a clear regulatory position.
In this era of convergence, regulators are facing new issues such as how to transition different rights of individual groups of licensees under a specific interconnection regime to a unified licensing regime. Finally, regulators are also facing the challenge of how to address the complexities created by a multiplicity of operators utilizing a variety of technologies interconnecting among themselves. In the ITU-D study group question on interconnection, for example, the participants studied possible solutions to this issue, including the interconnection gateway exchange and interconnection billing clearing house.1
ENDNOTES
1 ITU-D Study Group 1, Report on Interconnection - Question 6-1/1, 3rd Study Period, Annex VI - Possible Solution for Interconnection in Multi-Operator and Multi-Service Scenario through an Interconnection Gateway Exchange and Interconnection Billing Clearing House.