4.3.3 Interconnection

The technological innovations that have resulted in the convergence of telecommunications, information and broadcasting have raised numerous regulatory issues regarding interconnection. Until recently, interconnection policies were mainly used to facilitate competition by requiring incumbent telecommunications operators (or dominant suppliers) to provide interconnection to competing operators. Today, effective interconnection arrangements are considered an essential element to foster the development of integrated ICT markets. Convergence has forced a reassessment of this policy in order to take into account the interconnection of different types of networks and service providers (e.g., cable television/content providers and IP networks/ISPs).

Traditional interconnection regulation was established for telecommunications operators with interconnection rates generally based on time (i.e., per minute). Services based on IP protocol, however, do not fit within the traditional schemes of switched voice interconnection and requires different kinds of access (e.g., interconnection at an IP level or the higher frequencies of the local loop necessary to provide ADSL data services over the existing copper wiring) and different kinds of charges. This is necessary to permit, in a converged environment, the fundamental principle that any network operator is able to interconnect with any other operator regardless of the network (i.e., “any-to-any” interconnection). Countries are addressing these needs by introducing: (i) a symmetrical interconnection regime, (ii) new kinds of “access” through interconnection regulation and (iii) a technology-neutral interconnection charging system based on capacity, instead of time and distance.

(a) Introduction of a Symmetrical Interconnection Regime

Traditionally, only public switched network operators (fixed or mobile) were subject to interconnection obligations. However, there has been some ambiguity regarding other operators, such as cable networks or ISPs. As convergence blurs the traditional difference between networks, regulators are introducing a symmetrical interconnection regime in which any operator, regardless of the type of network it has, is obliged to interconnect with any other operator. For instance, in Denmark, communications network providers offering service to the general public (including traditional telephone network operators as well as broadcasters and Internet service providers) have the obligation of, and the right to, interconnection. In Argentina, new legislation1 implemented a symmetrical interconnection regime where all operators are obliged to interconnect upon request.

However, some jurisdictions have maintained asymmetrical interconnection. For instance, the EU NRF requires regulators throughout the EU to carry out a market analysis to determine which operators have significant market power. Interconnection has been separated into three different markets (i.e., call origination, call termination and transit). Regulators will decide after this analysis which markets are deemed to have significant market power. In each such market, an operator is obliged to provide interconnection. By way of example, the EC has determined that all mobile operators are dominant in the provision of termination on their networks as there is no realistic possibility of substitution.2

(b) New Kind of Access

To address the different needs of IP network and service operators for interconnection, the EU NRF introduced the concept of “access”,3 principally for origination, which allows ad hoc interconnection to network infrastructure via direct access or resale (such as local shared access4 or bitstreamaccess).5 Within the EU, member states have implemented “access” interconnection and granted this right to operators other than traditional voice providers. Member states, such as Denmark, Finland, and Greece, have determined that all operators have a right to bitstream access, and Austria has allowed ISPs to request unbundled infrastructure.

The United Kingdom has proposed implementing an “equivalence of inputs” (EoI) for NGN6 that obliges the incumbent telecommunications operator to make available the same products7 and services to other operators as it makes available to itself, at a wholesale price (which is the same ‘transfer’ price that a network division may provide to a retail division), and using the same system and processes. EoI implements a further step within the “access” concept, as it allows operators to request directly , on a wholesale basis, services which have a retail counterpart instead of regulating a physical connection. See Table 4-6 for a comparative summary of the EU concept of access and the U.K. concept of EoI.

Table 4-6: The EU Concept of Access and the U.K. Concept of Equivalence of Inputs

(c) Capacity-based Interconnection

A relatively new measure being implemented to address convergence needs for interconnection is a flat charge representing the cost of the capacity, rather than a per-minute rate. Some jurisdictions, such as Spain and Colombia, have implemented a capacity-based interconnection (CBI) modality that allows operators to request a specific capacity for interconnection and pay a flat rate charge that reflects the fixed cost nature of the interconnection capacity. As interconnection capacity is dimensioned to peak-hour traffic, CBI rates reflect true economic costs and do not require artificially spreading such fixed costs over projected traffic minutes to arrive at a per-minute charge.

In Spain, CBI was introduced in the incumbent’s Reference Interconnection Offer10 (RIO), and allows operators to request interconnection through three different models: (i) on a capacity basis; (ii) a time-based model; or (iii) or a mix of both. Capacity-based interconnection may be requested in two capacity units (64kbps and 320kbps) and the RIO allows for the reselling of excess capacity. Similarly, in Colombia, the regulator issued a resolution11 allowing operators the option of choosing time-based interconnection or capacity interconnection on a per-city basis. However, there is only a single 2 Mbps capacity unit and reselling is not allowed.

The table below compares the capacity interconnection models of Spain and Colombia.

Table 4-7: Comparison of Capacity Interconnection Models of Spain and Colombia

(d) Networks that Require Interconnection

The types of networks and services to be considered in interconnection policies vary with the development of new technologies. Examples of services that have required a reshaping of such policies are mobile data, cable television, and Internet.

When first introduced, Short Messaging Service (“SMS”) provided mobile users the ability to transmit text between mobile terminal devices. Today, SMS may be transmitted from call centers and websites, and may even be received by fixed line users. This has pushed the boundaries of voice-focused interconnection policies and has forced regulators to consider whether traditional interconnection policies should be applicable to SMS traffic between mobile operators, content providers and fixed line operators. In Bahrain, Venezuela, and Mexico, regulators ordered interconnection for SMS providers.13

Another challenge regarding interconnection with mobile networks is the emergence of multimedia applications, prompting questions as to whether mobile network operators can operate as ISPs and whether there should be any limitations on the ability of users to access mobile portals. Whether a mobile network operator can operate as an ISP is generally based on the scope of the mobile provider’s licence or whether a special licence is required to provide Internet access. Where the provision of Internet access does not require a licence, mobile operators generally do not encounter problems in deploying mobile Internet services. Consumers should be allowed to use alternative access and content providers, but this is not possible when mobile operators lock users in their portals. Mobile operators should be required to open their networks to other Internet service providers, content providers and other portals.

Regulators have also taken different decisions regarding Internet access via cable television modem networks. Some countries such as the United States, have ruled that Internet access is unregulated and, therefore, cable operators have no obligation to open their networks to alternative ISPs.14 Other countries, such as Canada, have ruled that cable television companies are obliged to make their Internet access network available for resale to other operators.15

ENDNOTES

1 Decree PEN 764/2000, B.O. 29476 (05/09/2000) dated 3 September 2000, at http://www.cnc.gov.ar/normativa/pdf/dec0764_00.pdf

2 Commission guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic networks and services, OJ 2002 C 165/3.

3 Directive 2002/19/EC of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (EU Access Directive), available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!DocNumber&lg=en&type_doc=Directive&an_doc=2002&nu_doc=19

4 “In the case of shared access, the incumbent continues to provide telephony service, while the new entrant delivers high-speed data services over that same local loop.” See European Electronic Communications Regulation and Markets 2004 (10th Report), dated 2 December 2004.

5As defined by the European Electronic Communications Regulation and Markets 2004 (10th Report), dated 2 December 2004: “Bitstream access is a wholesale product that consists of the provision of transmission capacity in such a way as to allow new entrants to offer their own, value-added services to their clients.”

6 Ofcom, Next Generation Networks: Further Consultation, 30 June 2005, available at http://www.ofcom.org.uk/consult/condocs/nxgnfc/ngnfc1.pdf.

7 Services are limited to those determined as being provided under “Significant Market Power.”

8 EU Access Directive.

9 OFCOM, Next Generation Networks: Further Consultation, 30 June 2005.

10 See http://www.cmt.es/

11 CRT Resolution No. 469 of 2002.

12 This limitation reflects the telecommunications licences in Colombia that originally were for individual cities.

13 Mindel De La Torre and Sofie Maddens, Transitioning Regulation from Old to New, in Trends in Telecommunication Reform 2004/2005: Licensing in an Era of Convergence, ITU (2004).

14 FCC, In the Matter of Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities. Internet Over Cable Declaratory Ruling, Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities, Declaratory Ruling and Notice of Proposed Rulemaking, GN Docket No. 00-185 and CS Docket No.02-52 (2002), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-77A1.pdf.

15 CRTC Telecom Decision 99-11, available at http://www.crtc.gc.ca/archive/ENG/Decisions/1999/DT99-11.HTM.