Interconnection of telecommunications services

 

Interconnection is considered the most important issue in the sector industry. It refers to the connections to be made between the networks of different operators and service providers that are necessary to ensure full connectivity between the users of all networks.

In the past before the flourishing of privatized telecom markets, interconnection between the monopolizing entities imposed no problems and was of direct value and benefit for all involved. With a privatized multiplayer market and the introduction of competition, companies of significant power began to enforce their stipulations and terms on interconnection agreements to protect themselves and try to gain a market stand in the harsh competitive environment. Regulatory care for the subject is mandatory to protect new entrants from doomed failure.

The International Telecommunications Union (ITU) defined the term "interconnection" as:

“The commercial and technical arrangements under which service providers connect their equipment, networks and services to enable customers to have access to the customers, services and networks of other service providers.” (ITU, 1995)

These arrangements are usually developed by the companies of interest by deliberate and articulate discussions. The regulator is only to facilitate and try to solve outstanding snags. The regulator normally facilitates the matter towards agreement by inviting every company involved to submit a negotiable offer, which is called the Reference Interconnection Offer (RIO).  Reaching such an agreement is the most difficult task for the Regulator because failure to do so has a drastic and undermining impact on the sector and consequently the economy.

The technically-defined and the physical location of the interconnection points are important issues for concluding a workable interconnection agreement, but the pricing methodology and level are the true points of contest. Pricing the interconnection is usually based on cost of the involved segment of installations.

The WTO, asserting the role of Telecommunication and Information exchange as mandatory for the global economy, emphasized in the “Regulation Reference Paper” the quality of interconnection with major suppliers in signatory countries. It requires interconnection to be ensured under terms and conditions that are no less favourable than those provided for their own similar services. Interconnection must also be no less favourable than that provided to a major supplier's subsidiaries or its other affiliates. The paper also called for the adoption of a sound cost-based pricing methodology.

In practice, it is very difficult to ensure the implementation of such policies. Many interconnection complaints of new entrants deal with unequal quality of interconnection as between the incumbent's services and their own or the unreasonably high costs. To this end, Regulators were requested to adopt the practical tools available to them upheld by due legislations to promote high quality and reasonably priced interconnection:

¨       Establishing interconnection quality of service monitoring system.

¨       Monitoring complaints and establishing significant penalties for unequal service quality.

¨       Establishing an independent interconnection Service Group within the incumbent's organization.

¨       Establish an able and qualified Dispute Resolution regime.

¨       Article (37) of the Telecommunications Act makes interconnection obligatory.

¨       By-Laws 2002 detail guidelines and rules such as:

¾      Objective of interconnection.                       (art. 32).

¾      Interconnection principles.                          (art. 33).

¾      Obligations of interconnection parties.          (art. 34).

¾      Points of interconnection.   (art. 35).

¾      Anti-competitive conduct of incumbent.       (art. 36).

¾      Pricing principles.                                        (art. 43).

¾      Reference Interconnection Offer.

¾      Interconnection Agreement. (                     (art. 44).