TABLE OF CONTENTS Interconnection between separately owned telecommunications networks is as old as the industry itself. Even yesterday's monopoly networks needed to interconnect for the purposes of international communications. Various standards-setting bodies laid down the technical interfaces and operational basis, enabling telecommunications companies to operate together with an acceptable and well-understood quality of service. The International Telecommunications Union (ITU) is a United Nations charter organisation and a major agent for standardisation. The main concern of this chapter, however, is not with technical standards but with the regulatory arrangements necessary to oversee successful interconnection and interoperation between separate networks in competitive markets.
It is self-evident that separate telecommunications networks must interconnect with others in a competitive market. Accordingly, regulators insist that all public telecommunications operators must be willing to enter into negotiation with any operator that requests interconnection, and that dominant operators must interconnect when requested. The commercial terms for dominant operators usually have to be basedonthe longrunincrementalcosts (LRIC)ofprovidingtheinterconnection, and national regulatory authorities will determine terms and conditions where operators have been unable to agree them bilaterally.
Interconnection is essential for three reasons: for consumer benefit, to encourage competition and to prevent abuse of market dominance. The consumer interest is best served when a customer of any network is able to make calls or send messages to any compatible terminal, regardless of whichever operator supplies service to that destination. Competition is encouraged when a new entrant's customers can receive traffic from or originate traffic to any other user...
