In many developing countries, transparency of interconnection and access to information are key challenges.
Transparency
Many countries require dominant operators to make the terms and conditions of interconnection transparent. In addition, the WTO requires Members to ensure that agreements or model interconnection offers of major suppliers are made public.
The objective of such transparency is generally to prevent dominant operators from discriminating between different competitors, or otherwise acting to limit competition. For example, a dominant operator could enter into confidential interconnection agreements that provide unfavourable interconnection arrangements with competitors, and favourable terms for affiliates.
Requiring operators to publish interconnection agreements enables regulators and other operators to monitor interconnection terms and agreements, and identify discriminatory or potentially anti-competitive behaviour.
Transparency is also important in regulatory processes. For a regulator’s decisions to be credible, the regulated firm and other stakeholders must have confidence in the decision making process. Ways to achieve this include public consultation processes, and requirements for regulators to publish the reasons for their decisions.
Regulatory transparency may be difficult to implement in countries with weak legal and administrative structures, and no tradition of transparency. However, where an independent regulator is not well established, this provides an opportunity to introduce procedures for regulatory transparency at the outset.
Access to Information
In order to regulate effectively, a regulator needs access to detailed information about the regulated firm. For example, regulators often require detailed cost information and information on the regulated firm’s cost of capital.
In many developing countries such detailed information is simply not available. The incumbent firm may not have sufficiently detailed network data to enable long run incremental cost modeling. Or the regulator may not have sufficient powers to require the regulated firm to provide the information.
Where this is the case alternative, less data intensive, approaches can be taken:
- Top down cost models are based on the firm’s existing financial accounts. The ITU’s COSITU model is a top down cost model that has been designed for use in developing countries,
- International benchmarking can be used to estimate interconnection prices, or individual inputs for costing exercises. (For example, COSITU provides benchmark data for the inputs needed to estimate cost of capital, where this information is not available).